Agreement and Plan of Merger - Hain Food Group Inc. and Arrowhead Mills Inc.
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 24, 1998, by and between The
Hain Food Group, Inc., a Delaware corporation ("HAIN"), and Arrowhead Mills,
Inc., a Texas corporation (the "COMPANY").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of each of Hain and the Company have
approved the merger (the "MERGER") of the Company with and into a wholly owned
subsidiary of Hain to be formed for the purpose thereof ("HAIN SUBSIDIARY"),
upon the terms and subject to the conditions set forth herein and in accordance
with the General Corporation Law of the State of Delaware (the "DGCL") and the
Texas Business Corporation Act (the "TBCA");
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a tax free reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
and agreements herein contained, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
MERGER
1.1 FORMATION OF HAIN SUBSIDIARY. Hain shall form Hain Subsidiary under
the DGCL. Hain Subsidiary will be formed solely to facilitate the Merger and the
transactions contemplated thereby and will conduct no business or activity other
than in connection with the Merger. Hain will cause Hain Subsidiary to execute
and deliver a joinder to this Agreement pursuant to Section 251 of the DGCL and
will execute a written consent as the sole stockholder of Hain Subsidiary,
approving the execution, delivery and performance of this Agreement by Hain
Subsidiary.
1.2 THE MERGER. At the Effective Time (as hereinafter defined), the
Company shall be merged with and into Hain Subsidiary as provided herein.
Thereupon, the corporate existence of Hain Subsidiary, with all its purposes,
powers and objects, shall continue unaffected and unimpaired by the Merger, and
the corporate identity and existence, with all the purposes, powers and objects,
of the Company shall be merged with and into Hain Subsidiary and Hain Subsidiary
as the corporation surviving the Merger (hereinafter sometimes called the
"SURVIVING CORPORATION") shall continue its corporate existence under the laws
of the State of Delaware. The name of the Surviving Corporation shall be
Arrowhead Mills, Inc.
1.3 FILING. As soon as practicable after fulfillment or waiver of the
conditions set forth in Sections 9.1, 9.2 and 9.3 or on such later date as may
be mutually agreed to between Hain and the Company, the parties hereto will (i)
cause to be filed with the office of the Secretary of State of the State of
Delaware, a certificate of merger (the "DELAWARE CERTIFICATE OF MERGER"), in
such form as required by, and executed in accordance with, the relevant
provisions of the DGCL, and (ii) cause to be filed with the office of the
Secretary of State of Texas, a certificate of merger (the "TEXAS CERTIFICATE OF
MERGER"), in such form as required by, and executed in accordance with, the
relevant provision of the TBCA.
1.4 EFFECTIVE TIME OF THE MERGER. The Merger shall be effective at the
time that the filing of each of the Delaware Certificate of Merger and the Texas
Certificate of Merger, or at such later time specified in such Certificates of
Merger, which time is herein sometimes referred to as the "EFFECTIVE TIME" and
the date thereof is herein sometimes referred to as the "EFFECTIVE DATE."
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ARTICLE II
CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of Hain
Subsidiary shall be the Certificate of Incorporation of the Surviving
Corporation.
2.2 BY-LAWS. The By-Laws of Hain Subsidiary shall be the By-Laws of the
Surviving Corporation until the same shall thereafter be altered, amended or
repealed in accordance with law, the Certificate of Incorporation of the
Surviving Corporation or said By-Laws.
2.3 DIRECTORS AND OFFICERS. The directors of Hain Subsidiary immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
each to hold office in accordance with the Articles of Incorporation and By-laws
of the Surviving Corporation, and the officers of Hain Subsidiary immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
3.1 CONVERSION.
(a) MERGER CONSIDERATION. At the Effective Time, the issued shares of
capital stock of the Company (other than Dissenting Shares) shall, by virtue of
the Merger and without any action on the part of the holders thereof, become and
be converted as follows: each outstanding share of common stock, par value $.01
per share, of the Company (the "COMPANY COMMON STOCK"), shall be converted into
and become the right to receive the Pro Rata Amount (as defined below) of the
Merger Consideration (as defined below). "MERGER CONSIDERATION" means
$45,750,000, subject to adjustment in the manner set forth in Section 3.1(b),
consisting of a combination of (x) shares of Common Stock, par value $.01 per
share (the "HAIN COMMON STOCK"), of Hain (the "STOCK MERGER CONSIDERATION") and
(y) cash (the "CASH MERGER CONSIDERATION"). The allocation of Merger
Consideration between Stock Merger Consideration and Cash Merger Consideration
shall be determined at the sole option of Hain, by written notice to the Company
on the third day prior to the Closing Date (as defined herein); PROVIDED,
HOWEVER, that (i) if any of the Merger Consideration is comprised of Stock
Merger Consideration, then at least 50% of the Merger Consideration shall be
comprised of Stock Merger Consideration (before giving effect to any adjustments
provided for in Section 3.1(b)) and (ii) the Cash Merger Consideration shall be
at least $15,000,000 in the aggregate. The Stock Merger Consideration shall
consist of the number of shares of Hain Common Stock having an aggregate market
value based on the Closing Date Market Price (as defined below). With respect to
any share of the Company Common Stock, "PRO RATA AMOUNT" means the product of
the Merger Consideration multiplied by a fraction, the numerator of which is one
and the denominator of which is the aggregate number of all issued and
outstanding shares of the Company Common Stock on the Effective Date, allocated
between Stock Merger Consideration and Cash Merger Consideration in the
proportion specified by Hain as set forth above. "CLOSING DATE MARKET PRICE"
means, with respect to each share of Hain Common Stock, the average closing
price for such share as reported on the National Market System of The Nasdaq
Stock Market, Inc. for the 10 most recent trading days ending on the third day
prior to the Effective Time.
(b) ADJUSTMENT TO CASH MERGER CONSIDERATION. The aggregate amount of Cash
Merger Consideration shall be reduced immediately prior to the Effective Time by
an amount equal to the sum of (i) the amount of fees, costs and expenses
incurred or reasonably estimated to be incurred by the Company or incurred (but
not paid) by the shareholders of the Company existing immediately prior to the
Effective Time to the extent that the Company and/or the shareholders of the
Company are liable therefor pursuant to Section 8.11 hereof and (ii) any excess
of the aggregate indebtedness for borrowed money of the Company (net of cash and
cash equivalents) as of the Closing Date over $20.0 million; provided, any
reduction in Cash Merger Consideration shall not result in any adjustment to the
amount of Stock Merger
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Consideration for purposes of this Article III. The aggregate amount of Cash
Merger Consideration shall be increased by the amount that $20,000,000 exceeds
the aggregate indebtedness for borrowed money of the Company (net of cash and
cash equivalents) as of the Closing Date.
3.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. From and after the Effective Time, Hain shall make
available to Continental Stock Transfer & Trust Company or such other bank or
trust company designated by Hain (the "EXCHANGE AGENT"), for the benefit of the
holders of shares of Company Common Stock, for exchange in accordance with this
Article III through the Exchange Agent, (i) certificates evidencing a sufficient
number of shares of Hain Common Stock issuable to holders of Company Common
Stock to satisfy the requirements set forth in Section 3.1 relating to Stock
Merger Consideration and (ii) an amount in cash evidencing the Cash Merger
Consideration (such shares of Hain Common Stock and cash being hereinafter
referred to as the "EXCHANGE FUND"). As promptly as practicable after the
Effective Time, Hain shall cause the Exchange Agent to deliver the Stock Merger
Consideration and Cash Merger Consideration contemplated to be issued pursuant
to Section 3.1 out of the Exchange Fund in accordance with the procedures
specified in this Section 3.2. Except as contemplated by Section 3.2(g) hereof,
the Exchange Fund shall not be used for any other purpose.
(b) EXCHANGE PROCEDURES. As promptly as practicable after the Effective
Time, Hain shall cause the Exchange Agent to mail to each record holder of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "CERTIFICATES") (i)
a letter of transmittal (which shall be in customary form and shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration.
(c) EXCHANGE OF CERTIFICATES. Upon surrender to the Exchange Agent of a
Certificate for cancellation, together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, and such
other documents as may be reasonably required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor (i)
a certificate representing that number of whole shares of Hain Common Stock, if
any, constituting Stock Merger consideration to which such holder is entitled
pursuant to this Article III (including any cash in lieu of any fractional
shares of Hain Common Stock to which such holder is entitled pursuant to Section
3.2(f) and any dividends or other distributions to which such holder is entitled
pursuant to Section 3.2(d) (together, the "ADDITIONAL PAYMENTS")) and (ii),
without interest, the amount of cash constituting Cash Merger Consideration such
holder is entitled to pursuant to this Article III, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of shares of Company Common Stock which is not registered in the transfer
records of the Company, the applicable Merger Consideration and Additional
Payments, if any, may be issued to a transferee if the Certificate representing
such shares of Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 3.2, each Certificate shall be
deemed at all times after the Effective Time to represent only the right to
receive upon such surrender the applicable Merger Consideration with respect to
the shares of Company Common Stock formerly represented thereby and Additional
Payments, if any.
(d) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No dividends
or other distributions declared or made after the Effective Time with respect to
Hain Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to Hain Common Stock
the holder thereof is entitled to receive upon surrender thereof, and no cash
payment in lieu of any fractional shares shall be paid to any such holder
pursuant to Section 3.2(f), until the holder of such Certificate shall surrender
such Certificate. Subject to the effect of escheat, tax or other applicable
Laws,
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following surrender of any such Certificate, there shall be paid to the holder
of the certificates representing whole shares of Hain Common Stock issued in
exchange therefor, without interest, (i) promptly, the amount of any cash
payable with respect to fractional Hain Common Stock to which such holder is
entitled pursuant to Section 3.2(f) and the amount of dividends or other
distributions with a record date after the Effective Time and theretofore paid
with respect to such whole shares of Hain Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions, with a
record date after the Effective Time but prior to surrender and a payment date
occurring after surrender, payable with respect to such whole Hain Common Stock.
After the Effective Time, each outstanding Certificate which theretofore
represented shares of Company Common Stock shall, until surrendered for exchange
in accordance with this Section 3.2, be deemed for all purposes to evidence
ownership of the number of shares of Hain Common Stock into which the shares of
Company Common Stock (which, prior to the Effective Time, were represented
thereby) shall have been so converted.
(e) NO FURTHER RIGHTS IN COMPANY COMMON STOCK. At the Effective Time all
outstanding shares of Company Common Stock (other than Dissenting Shares), by
virtue of the Merger and without any action on the part of the holders thereof,
shall no longer be outstanding and shall be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such shares of
Company Common Stock shall thereafter cease to have any rights with respect to
such shares of Company Common Stock, except the right to receive the Merger
Consideration for such shares of Company Common Stock. All Hain Common Stock
constituting Stock Merger Consideration and cash constituting Cash Merger
Consideration issued or paid, as the case may be, issued upon conversion of the
shares of Company Common Stock in accordance with the terms hereof (including
any cash paid pursuant to Section 3.2(d) or (f)) shall be deemed to have been
issued or paid, as the case may be, in full satisfaction of all rights
pertaining to such shares of Company Common Stock.
(f) NO FRACTIONAL SHARES. No fractional shares of Hain Common Stock shall
be issued in the Merger. In lieu of any such fractional shares, each holder of
Company Common Stock, who would otherwise have been entitled to a fraction of
Hain Common Stock pursuant to this Article III, will be paid an amount in cash
(without interest) rounded to the nearest cent, determined by multiplying (i)
the average of the Closing Date Market Price of the Hain Common Stock by (ii)
the fractional interest to which such holder would otherwise be entitled (after
taking into account all shares of Company Common Stock held of record by such
holder at the Effective Time).
(g) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund which
remains undistributed to the holders of Company Common Stock for 12 months after
the Effective Time shall be delivered to Hain, upon demand, and any holders of
Company Common Stock who have not theretofore complied with this Article III
shall thereafter look only to Hain (who shall thereafter act as Exchange Agent)
for the applicable Merger Consideration and any Additional Payments to which
they are entitled. Any portion of the Exchange Fund remaining unclaimed by
holders of shares of Company Common Stock as of a date which is immediately
prior to such time as such amounts would otherwise escheat to or become property
of any government entity shall, on the third anniversary of the Effective Date
and to the extent permitted by applicable law, become the property of Hain free
and clear of any claims or interest of any person previously entitled thereto.
(h) NO LIABILITY. None of the Exchange Agent, Hain or the Surviving
Corporation shall be liable to any holder of Certificates for any shares of Hain
Common Stock (or dividends or distributions with respect thereto), or cash
delivered to a public official pursuant to any abandoned property, escheat or
similar law.
(i) WITHHOLDING RIGHTS. Each of the Surviving Corporation and Hain shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Certificates such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Hain, as the case
may be, such withheld amounts shall be treated
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for all purposes of this Agreement as having been paid to the holder of the
Certificates in respect of which such deduction and withholding was made by the
Surviving Corporation or Hain, as the case may be.
(j) LOST CERTIFICATES. If any Certificate shall have been lost, stolen or
destroyed, upon the making of a customary affidavit and indemnity agreement of
that fact by the person claiming such Certificate to be lost, stolen or
destroyed, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the applicable Merger Consideration and Additional
Payments, if any.
(k) DISSENTERS' RIGHTS. (i) Company shareholders desiring to dissent from
the Merger and obtain payment of the fair value of their shares of Company
Common Stock immediately before the consummation of the Merger in lieu of the
Merger consideration may exercise their dissenters' rights under the provisions
set forth at Articles 5.11 through 5.13 of the TBCA ("DISSENTERS' RIGHTS").
Consistent with Article 5.12 of the TBCA, the Company shall notify in writing
each shareholder entitled to assert Dissenters' Rights that action by written
consent has been taken to approve the Merger and shall provide each such
shareholder the dissenters' notice in accordance with Article 5.12 of the TBCA.
The date specified in such notice for receipt by the Company of payment demand
from any shareholder exercising rights of dissent shall be the earliest date
permitted by Article 5.12 of the TBCA.
(ii) Rights of Dissenting Shares. Shares of Company Common Stock which are
issued and outstanding as of the Effective Time and held by any shareholder who
has, in accordance with Article 5.12 of the TBCA, delivered a payment demand
accompanied by the required certification and deposit of shares ("DISSENTING
SHARES") shall not be converted as described in Section 3.1 but shall from and
after the Effective Time represent only the right to receive such consideration
as may be determined to be due under the TBCA. The Company shall give Hain
prompt notice upon receipt by the Company of any payment demand from any such
shareholder of the Company (a "DISSENTING SHAREHOLDER"). The Company agrees that
prior to the Effective Time, it will not, except with prior written consent of
Hain, voluntarily make any payment with respect to, or settle or offer to
settle, any request pursuant to the exercise of Dissenters' Rights. Each
Dissenting Shareholder who becomes entitled, pursuant to the TBCA, to payment
for his Dissenting Shares shall receive payment therefor in accordance with the
TBCA. Notwithstanding the foregoing, if any Dissenting Shareholders shall
rescind, fail to perfect or otherwise lose such rights either before or after
the Effective Time, such shareholder's shares of Company Common Stock shall be
converted into Hain Common Stock or cash, as of the Effective Time, in
accordance with the provisions of Section 3.1.
3.3 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer books
of the Company shall be closed and there shall be no further registration of
transfers of shares of Company Common Stock thereafter on the records of the
Company. On or after the Effective Time, any Certificates presented to the
Exchange Agent or Hain for any reason shall be converted into the applicable
Merger Consideration and Additional Payments, if any.
ARTICLE IV
CERTAIN EFFECTS OF THE MERGER
4.1 EFFECT OF THE MERGER. The effects and consequences of the Merger shall
be as set forth in Section 259 of the DGCL and Article 5.06 of the TBCA. Without
limiting the generality of the foregoing, on and after the Effective Time and
pursuant to the DGCL and the TBCA, the Surviving Corporation shall possess all
the rights, privileges, immunities, powers, and purposes of each of Hain
Subsidiary and the Company; all the property, real and personal, including
subscriptions to shares, causes of action and every other asset (including books
and records) of Hain Subsidiary and the Company shall vest in the Surviving
Corporation without further act or deed; and the Surviving Corporation shall
assume and be liable for all the liabilities, obligations and penalties of Hain
Subsidiary and the Company; PROVIDED, HOWEVER, that this
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shall in no way impair or affect the indemnification obligations of any party
pursuant to the indemnification provisions of this Agreement. No liability or
obligation due or to become due and no claim or demand for any cause existing
against either Hain Subsidiary or the Company, or any stockholder or
shareholder, officer or director thereof, shall be released or impaired by the
Merger, and no action or proceeding, whether civil or criminal, then pending by
or against Hain Subsidiary or the Company, or any stockholder or shareholder,
officer or director thereof, shall abate or be discontinued by the Merger, but
may be enforced, prosecuted, settled or compromised as if the Merger had not
occurred, and the Surviving Corporation may be substituted in any such action or
proceeding in place of Hain Subsidiary or the Company.
4.2 FURTHER ASSURANCES. If at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
either of Hain Subsidiary or the Company, the officers of such corporation are
fully authorized in the name of their corporation or otherwise to take, and
shall take, all such further action.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Hain as follows:
5.1 ORGANIZATION AND QUALIFICATION. Each of the Company and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or leased or the nature of its activities makes such qualification
necessary, except for failures to be so qualified or in good standing which
would not, individually or in the aggregate, have a material adverse effect on
the business, operations or financial condition of the Company and its
subsidiaries, taken as a whole (a "COMPANY MATERIAL ADVERSE EFFECT"). Section
5.1 of the Disclosure Schedule sets forth, with respect to the Company and each
of its subsidiaries, the jurisdiction in which they are qualified or otherwise
licensed as a foreign corporation to do business. Neither the Company nor any of
its subsidiaries is in violation of any of the provisions of its certificate or
articles of incorporation or organization (or other applicable charter document)
or by-laws. The Company has delivered to Hain accurate and complete copies of
the certificate or articles of incorporation or organization (or other
applicable charter document) and by-laws, as currently in effect, of each of the
Company and its subsidiaries.
5.2 CAPITAL STOCK OF SUBSIDIARIES. The only direct or indirect
subsidiaries of the Company are those listed in Section 5.2 of the Disclosure
Schedule. The Company is directly or indirectly the record and beneficial owner
of all of the outstanding shares of capital stock of each of its subsidiaries,
except as disclosed in Section 5.2 of the Disclosure Schedule, there are no
proxies with respect to such shares, and no equity securities of any of such
subsidiaries are or may be required to be issued by reason of any options,
warrants, scrip, rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any capital stock of any such subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any such
subsidiary is bound to issue additional shares of its capital stock or
securities convertible into or exchangeable for such shares. Other than as set
forth in Section 5.2 of the Disclosure Schedule, all of such shares so owned by
the Company are validly issued, fully paid and nonassessable and are owned by it
free and clear of any claim, lien or encumbrance of any kind with respect
thereto. Except as disclosed in Section 5.2 of the Disclosure Schedule, the
Company does not directly or indirectly own any interest in any corporation,
partnership, joint venture or other business association or entity.
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5.3 CAPITALIZATION. The authorized capital stock of the Company consists
of 10,000,000 shares of common stock, par value $.01 per share (the "COMPANY
COMMON STOCK"), and 2,000,000 shares of preferred stock, $.01 par value per
share. As of the date hereof, 566,990 shares of Company Common Stock were issued
and outstanding and no shares of preferred stock were issued and outstanding.
All of such issued and outstanding shares of Company Common Stock are validly
issued, fully paid and nonassessable and free of preemptive rights. Except as
set forth in Section 5.3 of the Disclosure Schedule, neither the Company nor any
of its subsidiaries is a party to any agreement or understanding, oral or
written, which (a) grants an option or other right to acquire any of the Company
Common Stock or any other equitable interest in the Company, (b) grants a right
of first refusal or other such similar right upon the sale of any of the Company
Common Stock, or (c) restricts or affects the voting rights of any of the
Company Common Stock.
5.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has full corporate
power and authority to execute and deliver this Agreement and to consummate the
Merger and other transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the Merger and other transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the Merger or
other transactions contemplated hereby (other than, with respect to the Merger,
the approval of the Company's shareholders pursuant to the TBCA). This Agreement
has been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery hereof by Hain, constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general equitable or fiduciary principles.
5.5 NO VIOLATIONS, ETC.
(a) Assuming that all filings, permits, authorizations, consents and
approvals or waivers thereof have been duly made or obtained as contemplated by
Section 5.5(b) hereof, except as listed in Section 5.5 of the Disclosure
Schedule, neither the execution and delivery of this Agreement by the Company
nor the consummation of the Merger or other transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or suspension of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company or any
of its subsidiaries under, any of the terms, conditions or provisions of (x)
their respective charters or by-laws, (y) except as set forth in Section 5.5 of
the Disclosure Schedule, any note, bond, mortgage, indenture or deed of trust,
or (z) any license, lease, agreement or other instrument or obligation to which
the Company or any such subsidiary is a party or to which they or any of their
respective properties or assets may be subject, or (ii) subject to compliance
with the statutes and regulations referred to in the next paragraph, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, except, in the case of clauses (i)(y), (i)(z) and (ii)
above, for such violations, conflicts, breaches, defaults, terminations,
suspensions, accelerations, rights of termination or acceleration or creations
of liens, security interests, charges or encumbrances which would not,
individually or in the aggregate, either have a Company Material Adverse Effect
or materially impair the Company's ability to consummate the Merger or other
transactions contemplated hereby.
(b) Except as set forth in Section 5.5 of the Disclosure Schedule, no filing
or registration with, notification to and no permit, authorization, consent or
approval of any governmental entity (including, without limitation, any federal,
state or local regulatory authority or agency) is required by the Company in
connection with the execution and delivery of this Agreement or the consummation
by the Company of the
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Merger or other transactions contemplated hereby, except (i) in connection with
the applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR ACT"), (ii) the filing of the Delaware Certificate
of Merger and the Texas Certificate of Merger, (iii) the approval of the
Company's shareholders pursuant to the TBCA, (iv) filings with applicable state
regulatory authorities identified in Section 5.5 of the Disclosure Schedule, (v)
filings with the Securities and Exchange Commission (the "SEC") and (vi) such
other filings, registrations, notifications, permits, authorizations, consents
or approvals the failure of which to be obtained, made or given would not,
individually or in the aggregate, either have the Company Material Adverse
Effect or materially impair the Company's ability to consummate the Merger or
other transactions contemplated hereby.
(c) As of the date hereof, except as set forth in Section 5.5 of the
Disclosure Schedule, none of the Company or any of its subsidiaries is in
violation of or default under (x) its respective certificate or articles of
incorporation or organization or by-laws, (y) any note, bond, mortgage,
indenture or deed of trust, or (z) any license, lease, agreement or other
instrument or obligation to which the Company or any such subsidiary is a party
or to which they or any of their respective properties or assets may be subject,
except, in the case of clauses (y) and (z) above, for such violations or
defaults which would not, individually or in the aggregate, either have a
Company Material Adverse Effect or materially impair the Company's ability to
consummate the Merger or other transactions contemplated hereby.
5.6 FINANCIAL STATEMENTS.
(a) Set forth in Section 5.6 of the Disclosure Schedule are true and
complete copies of the audited consolidated balance sheets of the Company at
July 31, 1997 (the "JULY 31 BALANCE SHEET") and the audited consolidated
statements of income, shareholders' equity and cash flow of the Company for the
year ended July 31, 1997 (the "JULY 31 FINANCIALS"). The July 31 Financials
fairly present, in all material respects, the financial position of the Company
at July 31, 1997, and the results of operations of the Company for the period
then ended, and have been prepared in accordance with generally accepted
accounting principles consistently applied by the Company. The July 31 Balance
Sheet reflects all liabilities of the Company, whether absolute, accrued or
contingent, as of the date thereof of the type required to be reflected or
disclosed on a balance sheet prepared in accordance with generally accepted
accounting principles.
(b) Set forth in Section 5.6 of the Disclosure Schedule is income before
interest and taxes for the twelve months ended December 31, 1997 ("DECEMBER 31
IBIT") for Dana Alexander, Inc., a New York Corporation and a wholly owned
subsidiary of the Company. December 31 IBIT is determined in accordance with
generally accepted accounting principles consistently applied (subject to the
exception set forth in Section 5.6 of the Disclosure Schedule).
(c) Prior to the Closing Date, the Company shall provide to Hain true and
complete copies of the unaudited balance sheet of the Company at February 28,
1998 (the "FEBRUARY 28 BALANCE SHEET") and the unaudited statements of income,
shareholders' equity and cash flow of the Company for the seven months then
ended (collectively, the "FEBRUARY 28 FINANCIALS"). The February 28 Financials
will fairly present, in all material respects, the financial position of the
Company at February 28 1998, and the results of operations of the Company for
the period then ended, and have been prepared in accordance with generally
accepted accounting principles consistently applied, except that such financial
statements will not include any footnote disclosures that might otherwise be
required to be included by generally accepted accounting principles, and shall
also be subject to normal non-recurring year-end audit adjustments. The February
28 Balance Sheet will reflect all liabilities of the Company, whether absolute,
accrued or contingent, as of the date thereof of the type required to be
reflected or disclosed on a balance sheet prepared in accordance with generally
accepted accounting principles.
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5.7 ABSENCE OF CHANGES OR EVENTS. Except as set forth on Section 5.7 of
the Disclosure Schedule, since July 31, 1997:
(a) there has been no material adverse change, or any development
involving a prospective material adverse change, in the business, operations
or financial condition of the Company and its subsidiaries taken as a whole;
(b) there has not been any direct or indirect redemption, purchase or
other acquisition of any shares of capital stock of the Company or any of
its subsidiaries, or any declaration, setting aside or payment of any
dividend or other distribution by the Company or any of its subsidiaries in
respect of its capital stock;
(c) except in the ordinary course of its business and consistent with
past practice, neither the Company nor any of its subsidiaries has incurred
any indebtedness for borrowed money, or assumed, guaranteed, endorsed or
otherwise as an accommodation become responsible for the obligations of any
other individual, firm or corporation, or made any loans or advances to any
other individual, firm or corporation;
(d) there has not been any change in the financial or the accounting
methods, principles or practices of the Company or its subsidiaries;
(e) except in the ordinary course of business and for amounts which are
not material, there has not been any revaluation by the Company or any of
its subsidiaries of any of their respective assets, including, without
limitation, writing down the value of inventory or writing off notes or
accounts receivables; and
(f) there has not been any agreement by the Company or any of its
subsidiaries to (i) do any of the things described in the preceding clauses
(a) through (f) other than as expressly contemplated or provided for in this
Agreement or (ii) take, whether in writing or otherwise, any action which,
if taken prior to the date of this Agreement, would have made any
representation or warranty in this Article V untrue or incorrect.
5.8 FORM S-4; PROSPECTUS/INFORMATION STATEMENT. None of the information
supplied or to be supplied by or on behalf of the Company for inclusion or
incorporation by reference in the registration statement to be filed with the
SEC by Hain in connection with the issuance of shares of Hain Common Stock in
the Merger (the "FORM S-4") will, at the time the Form S-4 becomes effective
under the Securities Act (as defined below), contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the Prospectus/Information Statement, in definitive form, or in the
soliciting material used in connection therewith (referred to herein
collectively as the "PROSPECTUS/INFORMATION STATEMENT") will, at the dates
mailed to shareholders pursuant to Section 8.1(b), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Company will
promptly inform Hain of the happening of any event prior to the Effective Time
which would render such information regarding the Company incorrect in any
material respect or require the amendment of the Prospectus/Information
Statement.
5.9 LITIGATION. Except as set forth in Section 5.9 of the Disclosure
Schedule, there is no (i) claim, action, suit or proceeding pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against or
relating to the Company or any of its subsidiaries before any court or
governmental or regulatory authority or body or arbitration tribunal, or (ii)
outstanding judgment, order, writ, injunction or decree, or application, request
or motion therefor, of any court, governmental agency or arbitration tribunal in
a proceeding to which the Company, any subsidiary of the Company or any of their
respective assets was or is a party except, in the case of clauses (i) and (ii)
above, such as would not, individually or in
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the aggregate, either have a Company Material Adverse Effect or materially
impair either of the Company's ability to consummate the Merger.
5.10 TITLE TO AND CONDITION OF PROPERTIES. Section 5.10 of the Disclosure
Schedule contains a true and complete list of all real properties owned by the
Company and its subsidiaries. Except as set forth in Section 5.10 of the
Disclosure Schedule, each of the Company and its subsidiaries have good title to
all of the real property and own outright all of the personal property (except
for leased property or assets) which is reflected on the July 31 Balance Sheet
except for property since sold or otherwise disposed of in the ordinary course
of business and consistent with past practice. Except as set forth in Section
5.10 of the Disclosure Schedule, no such real or personal property is subject to
claims, liens or encumbrances, whether by mortgage, pledge, lien, conditional
sale agreement, charge or otherwise, except for those which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
5.11 LEASES. Section 5.11 of the Disclosure Schedule contains a true and
complete list of all leases requiring the payment of rentals aggregating at
least $50,000 per annum pursuant to which real or personal property is held
under lease by either of the Company or any of its subsidiaries, and true and
complete copies of each lease pursuant to which either of the Company or any of
its subsidiaries leases real or personal property to others. All of the leases
so listed are valid and subsisting and in full force and effect and are subject
to no default with respect to either of the Company or its subsidiaries, as the
case may be, and, to the Company's knowledge, are in full force and effect and
subject to no default with respect to any other party thereto, and the leased
real property is in good and satisfactory condition.
5.12 CONTRACTS; BANK ACCOUNTS; INDEBTEDNESS.
(a) CONTRACTS AND COMMITMENTS. Section 5.12(a) of the Disclosure Schedule
contains a complete and accurate list of all Material (as defined below)
existing outstanding contracts and commitments, whether written or oral, of the
Company and its subsidiaries (i) the terms of which provide for the payment by
the Company and its subsidiaries after the date hereof as the recipient of goods
or services or involve the receipt by the Company or any of its subsidiaries as
the provider of goods or services, (ii) whereby the Company or any of its
subsidiaries leases equipment or real property, (iii) whereby the Company or any
of its subsidiaries has a firm commitment to purchase capital equipment (or
lease in the nature of a conditional purchase of capital equipment), (iv) which
continue for a period of twelve months or more and are not subject to a
unilateral right of termination by the Company without consideration, (v) which
restrict or purport to restrict any business activities or freedom of the
Company or any of its subsidiaries (or, to the knowledge of the Company, any of
its officers or employees) to engage in any business or to compete with any
person, or (vi) which relate to employment, consulting and agency agreements
which provide for any severance or termination benefit, or any other agreements,
contracts and commitments material to the Business. For purposes of this Section
5.12(a), a "MATERIAL" contract or commitment shall mean any contract or
commitment which the Company or any of its subsidiaries would be required to
file as an exhibit to reports filed by the Company with the SEC under the
Securities Act or the Exchange Act if the Company were required to file reports
thereunder. Except as set forth on Section 5.5 or Section 5.12(a) of the
Disclosure Schedule, none of the Company or any of its subsidiaries is in
default (nor is there any event which with notice or lapse of time or both would
constitute a default) under any material contract or commitment. Section 5.12(a)
of the Disclosure Schedule identifies each existing contract or commitment
containing an agreement with respect to any change of control or any
indemnification or other contingent obligations that would be triggered by the
Merger.
(b) BANK ACCOUNTS. Section 5.12(b) of the Disclosure Schedule contains a
complete and accurate list of the name of each bank in which the Company or any
of its subsidiaries has an account or safe deposit box (each, a "BANK ACCOUNT"
and, collectively, the "BANK ACCOUNTS"), the account number thereof and the
names of all persons authorized to draw thereon or to have access thereto.
(c) INDEBTEDNESS. Section 5.12(c) of the Disclosure Schedule contains a
complete and accurate list of all indebtedness for borrowed money of the Company
and its subsidiaries showing the aggregate amount
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by way of principal and interest which was outstanding as of a date not more
than seven days prior to the date of this Agreement and, by the terms of
agreements governing such indebtedness, is expected to be outstanding on the
Closing Date. Other than as set forth in Section 5.12(c) of the Disclosure
Schedule, neither this Agreement, the Merger nor the other transactions
contemplated hereby will result in any outstanding loans or borrowings by the
Company or any subsidiary of the Company becoming due, going into default or
giving the lenders or other holders of debt instruments the right to require the
Company or any of its subsidiaries to repay all or a portion of such loans or
borrowings.
5.13 LABOR MATTERS. Except to the extent that any of the following,
individually or in the aggregate, would have a Company Material Adverse Effect,
(a) neither the Company nor any of its subsidiaries fails to comply with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and neither the Company nor any of
its subsidiaries is engaged in any "unfair labor practice," as that term is
understood pursuant to the National Labor Relations Act, as amended, (b) there
is no labor strike, slowdown or stoppage pending (or, to the best knowledge of
the Company, any labor strike or stoppage threatened) against or affecting the
Company or any of its subsidiaries and (c) no petition for certification has
been filed and is pending before the National Labor Relations Board with respect
to any employees of the Company or any of its subsidiaries who are not currently
organized.
5.14 COMPLIANCE WITH LAW. Except for matters set forth in Section 5.14 of
the Disclosure Schedule, neither the Company nor any of its subsidiaries has
violated or failed to comply with any statute, law, ordinance, regulation, rule
or order of any foreign, federal, state or local government or any other
governmental department or agency (including, without limitation, any required
by the Food and Drug Administration or the Nutrition Labeling and Education Act
of 1990), or any judgment, decree or order of any court, applicable to its
business or operations, except where any such violation or failure to comply
would not, individually or in the aggregate, have a Company Material Adverse
Effect; the conduct of the business of each of the Company and its subsidiaries
is in conformity with all foreign, federal, state and local requirements, and
all other foreign, federal, state and local governmental and regulatory
requirements, except where such nonconformities would not, individually or in
the aggregate, have a Company Material Adverse Effect. The Company and its
subsidiaries have all permits, licenses and franchises from governmental
agencies required to conduct their businesses as now being conducted, except for
such permits, licenses and franchises the absence of which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Notwithstanding the foregoing, the representations and warranties of the Company
with respect to the matters covered by Sections 5.13, 5.17, 5.18 and 5.19 are
limited to the representations set forth therein, and no representation or
warranty with respect to such matters are made by the Company in this Section
5.14.
5.15 BOARD RECOMMENDATION. The Board of Directors of the Company has, by a
majority vote at a meeting of such Board duly held on April 21, 1998, approved
and adopted this Agreement, the Merger and the other transactions contemplated
hereby, determined that the Merger is fair to the shareholders of the Company
and recommended that the shareholders of the Company approve and adopt this
Agreement, the Merger and the other transactions contemplated hereby.
5.16 INTELLECTUAL PROPERTY. Section 5.16 of the Disclosure Schedule sets
forth a complete and accurate list of all of the trademarks (whether or not
registered) and trademark registrations and applications, patent and patent
applications, copyrights and copyright applications, service marks, service mark
registrations and applications, trade dress, trade and product names
(collectively, the "INTELLECTUAL PROPERTY") owned or licensed by the Company and
its subsidiaries. Except as set forth on Section 5.16 of the Disclosure
Schedule, (i) each of the Company and its subsidiaries has or owns, directly or
indirectly, all right, title and interest to such Intellectual Property or has
the perpetual right to use such Intellectual Property without consideration;
none of the rights of the Company and its subsidiaries in or use of such
Intellectual Property has been or is currently being or, to the knowledge of the
Company, is threatened to be infringed or challenged; (ii) all of the patents,
trademark registrations, service mark registrations, trade
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name registrations and copyright registrations included in such Intellectual
Property have been duly issued and have not been canceled, abandoned or
otherwise terminated; and (iii) all of the patent applications, trademark
applications, service mark applications, trade name applications and copyright
applications included in such Intellectual Property have been duly filed. To the
knowledge of the Company, the Company and its subsidiaries own or have adequate
licenses or other rights to use all Intellectual Property, know-how and
technical information required for their operation.
5.17 TAXES. Except as set forth in Section 5.17 of the Disclosure
Schedule: (i) the Company and each of its subsidiaries have prepared and timely
filed with the appropriate governmental agencies all Tax Returns required to be
filed for any period (or portion thereof) ending on or before the Effective
Time, taking into account any extension of time to file granted to or obtained
on behalf of the Company and/or its subsidiaries, and each such Tax Return is
complete and accurate in all material respects; (ii) all Taxes of the Company
and each of its subsidiaries in respect of any period (or portion thereof)
ending on or before the Effective Time have been paid in full to the proper
authorities, other than such Taxes as are being contested in good faith by
appropriate proceedings and are adequately reserved for in accordance with
generally accepted accounting principles; (iii) all deficiencies asserted in
writing resulting from examinations of any Tax returns filed by the Company or
any of its subsidiaries have been paid or finally settled, neither the Company
nor any of its subsidiaries is presently under examination or audit by any
taxing authority, and the Company has not received written notice of any pending
examination or audit of the Company or any of its subsidiaries by any taxing
authority; (iv) no extension of the period for assessment or collection of any
Tax is currently in effect and no extension of time within which to file any Tax
Return has been requested, which Tax Return has not since been filed; (v) no
liens have been filed with respect to any Taxes of the Company or any of its
subsidiaries other than in respect of property taxes that have accrued but are
not yet due and payable; (vi) neither the Company nor any of its subsidiaries
has made, or is required to make, any adjustment by reason of a change in their
accounting methods for any period (or portion thereof) ending on or before the
Effective Time that would affect the taxable income or deductions of the Company
or any of its subsidiaries for any period (or portion thereof) ending after the
Effective Date; (vii) the Company and its subsidiaries have made timely payments
of Taxes required to be deducted and withheld from the wages paid to their
employees and from all other amounts paid to third parties; (viii) neither the
Company nor any of its subsidiaries is a party to any tax sharing or tax matters
or similar agreement or is the indemnitor under any tax indemnification or
similar agreement; (ix) neither the Company nor any of its subsidiaries owns any
interest in any "controlled foreign corporation" (within the meaning of Section
957 of the Code) or "passive foreign investment company" (within the meaning of
Section 1296 of the Code); (x) neither the Company nor any of its subsidiaries
has made an election under Section 341(f) of the Code; (xi) neither the Company
nor any of its subsidiaries is a party to any agreement or arrangement that
provides for the payment of any amount, or the provision of any other benefit,
that could constitute a "parachute payment" within the meaning of Section 280G
of the Code; (xii) no claim has ever been made by an authority in a jurisdiction
where the Company or any of its subsidiaries does not file Tax Returns that such
entity is or may be subject to taxation by that jurisdiction; (xiii) neither the
Company nor any of its subsidiaries has ever been a member of any affiliated,
consolidated, combined or unitary group for any Tax purpose other than a group
of which it is currently a member; (xiv) neither the Company nor any of its
subsidiaries is currently a "personal holding company" (as defined in Section
542 of the Code), and neither the Company nor any of its subsidiaries has had
any "undistributed personal holding company income" (as defined in Section 545
of the Code) at any point during its last three completed taxable years; (xv)
none of the assets of the Company or any of its subsidiaries is "tax-exempt use
property" (as defined in Section 168(h)(1) of the Code) or may be treated as
owned by any other person pursuant to Section 168(f)(8) of the Internal Revenue
Code of 1954 (as in effect immediately prior to the enactment of the Tax Reform
Act of 1986); (xvi) neither the Company nor any of its subsidiaries has been a
"United States real property holding corporation," within the meaning of Section
897 of the Code at any time during the past five years; (xvii) there are no
"excess loss accounts" (as defined in Treas. Reg. Section 1.1502-19) with
respect to any stock of any subsidiary; (xviii) neither the Company nor any of
its
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subsidiaries has any (a) deferred gain or loss (1) arising from any deferred
intercompany transactions (as described in Treas. Reg. SectionSection 1.1502-13
and 1.1502-13T prior to amendment by Treasury Decision 8597 (issued July 12,
1995) or (2) with respect to the stock or obligations of any other member of any
affiliated group (as described in Treas. Reg. SectionSection 1.1502-14 and
1.1502-14T prior to amendment by Treasury Decision 8597) or (b) any gain subject
to Treas. Reg. Section 1.1502-13, as amended by Treasury Decision 8597; (xix)
neither the Company nor any of its subsidiaries has requested a ruling from, or
entered into a closing agreement with, the IRS or any other taxing authority in
its current taxable year or at any time during its last three completed taxable
years; and (xx) the Company has previously delivered to Hain true and complete
copies of (a) all federal, state, local and foreign income or franchise Tax
Returns filed by the Company and/or any of its Subsidiary for the last three
taxable years ending prior to the date hereof (except for those Tax Returns that
have not yet been filed) and (b) any audit reports issued within the last three
years by the IRS or any other taxing authority.
For all purposes of this Agreement, "TAX" or "TAXES" means (i) all federal,
state, local or foreign taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, alternative minimum,
gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes, customs duties, fees, assessments and charges of
any kind whatsoever, (ii) all interest, penalties, fines, additions to tax or
other additional amounts imposed by any taxing authority in connection with any
item described in clause (i) and (iii) all transferee, successor, joint and
several or contractual liability (including, without limitation, liability
pursuant to Treas. Reg. Section 1.1502-6 (or any similar state, local or foreign
provision)) in respect of any items described in clause (i) or (ii).
For all purposes of this Agreement, "TAX RETURN" means all returns,
declarations, reports, estimates, information returns and statements required to
be filed in respect of any Taxes.
5.18 EMPLOYEE BENEFIT PLANS; ERISA. Except as set forth in Section 5.18 of
the Disclosure Schedule:
(a) The Company has furnished Hain with a true and complete schedule of
all "employee pension benefit plans" as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained or contributed to by the Company, any of its subsidiaries or any
other ERISA Affiliates, or with respect to which the Company or any of its
subsidiaries contributes or is obligated to make payments thereunder or
otherwise may have any liability ("PENSION BENEFITS PLANS"), all "welfare
benefit plans" (as defined in Section 3(1) of ERISA), maintained or
contributed to by the Company or any of its subsidiaries or with respect to
which the Company or any of its subsidiaries otherwise may have any
liability ("WELFARE PLANS"), all multiemployer plans as defined in Section
3(37) of ERISA covering employees employed in the United States to which
such Company or any of its subsidiaries is required to make contributions or
otherwise may have any liability, all stock bonus, stock option, restricted
stock, stock appreciation right, stock purchase, bonus, incentive, deferred
compensation, severance and vacation or other employee benefit plans,
programs or arrangements that are not Pension Benefit Plans or Welfare Plans
maintained or contributed to by the Company or a subsidiary or with respect
to which the Company or any subsidiary otherwise may have any liability
("OTHER PLANS"). For purposes of this Agreement, "ERISA AFFILIATE" shall
mean any person (as defined in Section 3(9) of ERISA) that is or has been a
member of any group of persons described in Section 414(b), (c), (m) or (o)
of the Code including the Company or any of its subsidiaries.
(b) The Company and each of its subsidiaries, and each of the Pension
Benefit Plans, Welfare Plans and Other Plans (collectively, the "PLANS"),
are in compliance with the applicable provisions of ERISA, the Code and
other applicable laws except where the failure to comply would not,
individually or in the aggregate, have a Company Material Adverse Effect.
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(c) All contributions to, and payments from, the Plans which are required to
have been made in accordance with the Plans and, when applicable, Section 302 of
ERISA or Section 412 of the Code have been timely made except where the failure
to make such contributions or payments on a timely basis would not, individually
or in the aggregate, have a the Company Material Adverse Effect.
(d) No Pension Benefit Plan subject to Section 412 of the Code or Section
302 of ERISA has incurred an "accumulated funding deficiency" within the meaning
of Section 412(a) of the Code as of the end of the most recently completed plan
year.
(e) Each of the Pension Benefit Plans intended to qualify under Section 401
of the Code satisfies in form the requirements of such Section except to the
extent amendments are not required by law to be made until a date after the
Closing Date, has received a favorable determination letter from the Internal
Revenue Service ("IRS") regarding such qualified status, has not, since receipt
of the most recent favorable determination letter, been amended, and has not
been operated in a way that would cause the loss of such qualification or
exemption or the imposition of any material liability, penalty or tax under
ERISA or the Code.
(f) Each Welfare Plan that is intended to qualify for exclusion of benefits
thereunder from the income of participants or for any other tax-favored
treatment under any provisions of the Code (including, without limitation,
Sections 79, 105, 106, 125 or 129 of the Code) is and has been maintained in
compliance in all material respects with all pertinent provisions of the Code
and Treasury Regulations thereunder.
(g) There are (i) no investigations, audits or examinations pending, or to
the best knowledge of the Company, threatened by any governmental entity
(including the Pension Benefit Guaranty Corporation ("PBGC")) involving any of
the Plans, (ii) no termination proceedings involving the Plans and (iii) no
pending or, to the best knowledge of the Company, threatened claims (other than
routine claims for benefits), suits or proceedings against any Plan, against the
assets of any of the trusts under any Plan or against any fiduciary of any Plan
with respect to the operation of such plan or asserting any rights or claims to
benefits under any Plan or against the assets of any trust under such plan,
which would, in the case of clause (i), (ii) or (iii) of this paragraph (g),
give rise to any liability which would, individually or in the aggregate, have a
Company Material Adverse Effect.
(h) None of the Company, any of its subsidiaries or any employee of the
foregoing, nor any trustee, administrator, other fiduciary or any other "party
in interest" or "disqualified person" with respect to the Pension Benefit Plans
or Welfare Plans, has engaged in a "prohibited transaction" (within the meaning
of Section 4975 of the Code or Section 406 of ERISA) which could result in a tax
or penalty on the Company or any of its subsidiaries under Section 4975 of the
Code or Section 502(i) of ERISA which would, individually or in the aggregate,
have a Company Material Adverse Effect.
(i) Neither the Pension Benefit Plans subject to Title IV of ERISA nor any
trust created thereunder has been terminated nor have there been any "reportable
events" (as defined in Section 4043 of ERISA and the regulations thereunder)
(for which the disclosure requirements of Regulation section 4043.1 et seq.,
promulgated by the PBGC, have not been waived) with respect to either thereof
which would, individually or in the aggregate, have a Company Material Adverse
Effect nor has there been any event with respect to any Pension Benefit Plan
requiring disclosure under Section 4063(a) of ERISA or any event with respect to
any Pension Benefit Plan requiring disclosure under Section 4041(c)(3)(C) of
ERISA which would, individually or in the aggregate, have a Company Material
Adverse Effect.
(j) With respect to any Pension Benefit Plan subject to Title IV of ERISA,
there is not any amount of "unfunded benefit liabilities" (as defined in Section
4001(a)(18) of ERISA) under such plan determined based upon reasonable actuarial
assumptions and the asset valuation principles established by the PBGC.
(k) Neither the Company nor any subsidiary of the Company nor any ERISA
Affiliate has incurred, or is reasonably likely to incur any material liability
under Title IV of ERISA.
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(l) Neither the Company nor any ERISA Affiliate of the Company has incurred
any currently outstanding liability to the PBGC or to a trustee appointed under
Section 4042(b) or (c) of ERISA other than for the payment of premiums, all of
which have been paid when due. No Pension Benefit Plan has applied for, or
received, a waiver of the minimum funding standards imposed by Section 412 of
the Code. The information supplied to the actuary by the Company or any of its
subsidiaries for use in preparing the most recent actuarial report for Pension
Benefit Plans is complete and accurate in all material respects.
(m) Neither the Company, any of its subsidiaries nor any of their ERISA
Affiliates has any liability (including any contingent liability under Section
4204 of ERISA) with respect to any multiemployer plan, within the meaning of
Section 3(37) of ERISA (a "MULTIEMPLOYER PLAN"), covering employees employed in
the United States.
(n) With respect to each of the Plans, true, correct and complete copies of
the following documents have been made available to Hain: (i) the current plans
and related trust documents, including amendments thereto, (ii) any current
summary plan descriptions, (iii) the most recent Forms 5500 (if any) filed with
respect to each such Plan, (iv) the most recent financial statements and
actuarial reports, if applicable, (v) the most recent IRS determination letter,
if applicable; and (vi) if any application for an IRS determination letter is
pending, copies of all such applications for determination including
attachments, exhibits and schedules thereto.
(o) Neither the Company, any of its subsidiaries, any organization to which
either of the Company is a successor or parent corporation, within the meaning
of Section 4069(b) of ERISA, nor any of their ERISA Affiliates has engaged in
any transaction described in Section 4069(a) of ERISA, the liability for which
would, individually or in the aggregate, have a Company Material Adverse Effect.
(p) None of the Welfare Plans maintained by the Company or any of its
subsidiaries are retiree life or retiree health insurance plans which provide
for continuing benefits or coverage for any participant or any beneficiary of a
participant following termination of employment, except as may be required under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), or except where the full expense of such coverage or benefits is paid
by the participant or the participant's beneficiary. The Company and each of its
subsidiaries which maintain a "group health plan" within the meaning of Section
5000(b)(1) of the Code have complied with the notice and continuation
requirements of Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title
I of ERISA and the regulations thereunder except where the failure to comply
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
(q) No liability under any Plan has been funded nor has any such obligation
been satisfied with the purchase of a contract from an insurance company as to
which the Company or any of its subsidiaries has received notice that such
insurance company is in rehabilitation.
(r) Except as set forth in Section 5.18(r) of the Disclosure Schedule, the
consummation of the transactions contemplated by this Agreement will not either
alone or in connection with an employee's termination of employment or other
event result in an increase in the amount of compensation or benefits or
accelerate the vesting or timing of payment of any benefits or compensation
payable to or in respect of any employee of the Company or any of its
subsidiaries.
(s) Except as set forth in Section 5.18(s) of the Disclosure Schedule, the
consummation of the transactions contemplated by this Agreement will not result
in or satisfy a condition to the payment of compensation that would, in
combination with any other payment, result in an "excess parachute payment"
within the meaning of Section 280G(b) of the Code.
(t) The Company has furnished Hain with a true and complete schedule of each
Foreign Plan (as hereinafter defined) to the extent the benefits provided
thereunder are not mandated by the laws of the applicable foreign jurisdiction.
The Company and each of its subsidiaries and each of the Foreign Plans are in
compliance with applicable laws and all required contributions have been made to
the Foreign Plans, except where the failure to comply or make contributions
would not, individually and in the aggregate have
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a Company Material Adverse Effect. Each of the Foreign Plans that is a funded
defined benefit plan has a fair market value of plan assets that is greater than
the plan's liabilities, as determined in accordance with applicable laws. For
purposes hereof, the term "FOREIGN PLAN" shall mean any plan, program, policy,
arrangement or agreement maintained or contributed to by, or entered into with,
the Company or any subsidiary with respect to employees (or former employees)
employed outside the United States.
5.19 ENVIRONMENTAL MATTERS. Except as set forth in Section 5.19 of the
Disclosure Schedule and except for such matters as would not reasonably be
expected to have a Company Material Adverse Effect:
(a) Each of the Company and its subsidiaries has obtained (or is capable
of obtaining without incurring any material incremental expense) all
Environmental Permits and has no reason to believe any of them will be
revoked prior to their expiration, modified or will not be renewed, and have
made all registrations and given all notifications that are required under
any applicable Environmental Law.
(b) There is no Environmental Claim pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries under an
Environmental Law.
(c) The Company and its subsidiaries are in compliance with, and have no
liability under, applicable Environmental Laws including, without
limitation, all of their Environmental Permits.
(d) Neither the Company nor any of its subsidiaries has assumed, by
contract or otherwise, any liabilities or obligations arising under any
Environmental Laws.
(e) There are no past or present actions, activities, conditions,
occurrences or events, including, without limitation, the Release of any
Hazardous Materials, which could reasonably be expected to prevent
compliance by the Company or any of its subsidiaries with any Environmental
Law, or to result in any liability of the Company or any of its subsidiaries
under any Environmental Law.
(f) No lien has been recorded under any Environmental Law with respect
to any property, facility or asset currently owned by the Company or any of
its subsidiaries.
(g) Neither the Company nor any of its subsidiaries has received any
notification that any Hazardous Materials that any of them or any of their
respective predecessors in interest has used, generated, stored, treated,
handled, transported or disposed of has been found at any site at which any
person is conducting or plans to conduct any response or other action
pursuant to any Environmental Law.
(h) There is no friable asbestos or asbestos containing material in, on
or at any property, facility or equipment owned, operated or leased by the
Company or any of its subsidiaries.
(i) No property now or previously owned, operated or leased by the
Company or any of its subsidiaries or, to the knowledge of the Company, any
of their respective predecessors in interest is (i) listed or proposed for
listing on the National Priorities List under the Comprehensive
Environmental Response, Compensation & Liability Act of 1980, as amended
("CERCLA"), or (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated pursuant to
CERCLA, or on any comparable list established under any Environmental law.
(j) No underground or above ground storage tank or related piping, or
any surface impoundment, lagoon, landfill or other disposal site containing
any Hazardous Material is located at, under or on any property owned,
operated or leased by the Company or any of its subsidiaries or any, to the
knowledge of the Company, of their respective predecessors in interest, nor
has any of them been removed or decommissioned from or at any such property.
(k) The execution and delivery of this Agreement and the consummation by
the Company of the Merger and other transactions contemplated hereby and the
exercise by Hain of rights to own and operate the businesses of each of the
Company and its subsidiaries substantially as presently conducted will not
affect the validity or require the transfer of any Environmental Permits
held by the
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Company or any of its subsidiaries and will not require any notification,
disclosure, registration, reporting, filing, investigation, or remediation
under any Environmental Law.
(l) The Company has delivered or otherwise made available for inspection
to Hain copies of any investigations, studies, reports, assessments,
evaluations and audits in its possession, custody or control of Hazardous
Materials at, in, beneath or adjacent to any properties or facilities now or
formerly owned, leased, operated or used by it or any of its subsidiaries or
any of their respective predecessors in interest, or of compliance by any of
them with, or liability of any of them under, applicable Environmental Laws.
For purposes of Section 5.19:
(i) "ENVIRONMENT" means any surface water, ground water, drinking
water supply, land surface or subsurface strata, ambient air, indoor air
and any indoor location and all natural resources such as flora, fauna
and wetlands;
(ii) "ENVIRONMENTAL CLAIM" means any notice, claim, demand,
complaint, suit or other communication by any person alleging potential
liability (including, without limitation, potential liability for
response or corrective action or damages to any person, property or
natural resources, and any fines or penalties) arising out of or relating
to (1) the Release or threatened Release of any Hazardous Materials or
(2) any violation, or alleged violation, of any applicable Environmental
Law;
(iii) "ENVIRONMENTAL LAWS" means all federal, state, and local
laws, statutes, codes, rules, ordinances, regulations, judgments, orders,
decrees and the common law as now or previously in effect relating to
pollution or protection of human health or the Environment, including,
without limitation, those relating to the Release or threatened Release
of Hazardous Materials;
(iv) "HAZARDOUS MATERIALS" means pollutants, contaminants,
hazardous or toxic substances, constituents, materials or wastes, and any
other waste, substance, material, chemical or constituent subject to
regulation under Environmental Laws;
(v) "RELEASE" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the Environment; and
(vi) "ENVIRONMENTAL PERMIT" means a permit, identification number,
license, approval, consent or other written authorization issued pursuant
to any applicable Environmental Law.
5.20 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in Section
5.6 or 5.20 of the Disclosure Schedule or in the July 31 Financials, neither of
the Company nor any of its subsidiaries has any liabilities or obligations of
any nature, whether absolute, accrued, unmatured, contingent or otherwise, or
any unsatisfied judgments or any leases of personalty or realty or unusual or
extraordinary commitments, except the liabilities recorded on the July 31
Balance Sheet and the notes thereto, and except for liabilities or obligations
incurred in the ordinary course of business and consistent with past practice
since July 31, 1997 that would not individually or in the aggregate have a
Company Material Adverse Effect. Notwithstanding the foregoing, the
representations and warranties of the Company with respect to the matters
covered by Sections 5.13, 5.14, 5.17, 5.18 and 5.19 are limited to the
representations set forth therein, and no representation or warranty with
respect to such matters are made by the Company in this Section 5.20.
5.21 FINDERS OR BROKERS. Except as set forth in Section 5.21 of the
Disclosure Schedule, none of the Company, the subsidiaries of the Company, the
Board of Directors of the Company or any member of the Board of Directors of the
Company has employed any investment banker, broker, finder or intermediary in
connection with the transactions contemplated hereby who might be entitled to a
fee or any commission in connection with the Merger.
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5.22 STATE ANTITAKEOVER STATUTES. The Company has been granted all
approvals and taken all other steps necessary to exempt the Merger and the other
transactions contemplated hereby from the requirements and provisions of the
TBCA and any other applicable state antitakeover statute or regulation such that
none of the provisions of such statute or any other "business combination,"
"moratorium," "control share" or other state antitakeover statute or regulation
(x) prohibits or restricts the Company's ability to perform its obligations
under this Agreement or its ability to consummate the Merger and the other
transactions contemplated hereby, (y) would have the effect of invalidating or
voiding this Agreement any provision hereof, or (z) would subject Hain to any
material impediment or condition in connection with the exercise of any of its
rights under this Agreement.
5.23 OPINION OF FINANCIAL ADVISOR. The Company has received the opinion of
Wasserstein Perella & Co., Inc., dated April 21, 1998, to the effect that,
subject to the various assumptions and limitations set forth in such opinion as
of such date, the Merger Consideration is fair from a financial point of view to
the holders of shares of Company Common Stock.
5.24 INSURANCE. Except as disclosed in Section 5.24 of the Disclosure
Schedule, each of the Company and each of its subsidiaries is, and has been
continuously since July 31, 1996, insured in such amounts and against such risks
and losses as are customary for companies conducting the respective businesses
conducted by the Company and its subsidiaries during such time period. Except as
disclosed in Section 5.24 of the Disclosure Schedule, neither the Company nor
any of its subsidiaries has received any notice of cancellation or termination
with respect to any material insurance policy thereof. All material insurance
policies of the Company and its subsidiaries are valid and enforceable policies.
5.25 EMPLOYMENT AND LABOR CONTRACTS. Neither the Company nor any of its
subsidiaries is a party to any employment, management services, consultation or
other similar contract with any past or present officer, director, employee or
other person or, to the best knowledge of the Company, any entity affiliated
with any past or present officer, director or employee or other person other
than those set forth in Section 5.26 of the Disclosure Schedule and other than
the agreements executed by employees generally, the forms of which have been
delivered to Hain.
5.26 INVENTORY. As of February 28, 1998, all inventory of each of the
Company and its subsidiaries is valued on the Company's books and records at the
lower of cost or market, except for such variances as would not have a Material
Adverse Effect. Obsolete items and items of below standard quality have been
written off or written down to their net realizable value on the books and
records of the Company, except for such variances as would not have a Material
Adverse Effect. Subject to reserves reflected on the February 28 Balance Sheet,
all such inventory consisting of raw materials or packaging is usable in the
ordinary course of business, and all such inventory consisting of finished goods
is, and all such inventory consisting of work in process will upon completion
be, of merchantable quality, meeting all material contractual, and all Food and
Drug Administration and Nutrition Labeling and Education Act of 1990
requirements, and is, or in the case of work in process, will be, salable in the
ordinary course of business, except for such variances as would not have a
Material Adverse Effect.
5.27 BALANCE SHEET RESERVES. The reserves for accounts receivable as of
February 28, 1998, as reflected on Section 5.27 of the Disclosure Schedule, have
been established in accordance with generally accepted accounting principles and
such reserves, taken as a whole, are adequate to cover any losses relating to
collectibility of accounts receivable.
5.28 QUALIFICATION OF MERGER AS A TAX FREE REORGANIZATION.
(a) Neither the Company nor any person related to the Company within the
meaning of Treas. Reg. SectionSection 1.368-1(e)(3), (e)(4) and (e)(5) has
purchased, redeemed, or otherwise acquired, or made any extraordinary
distributions (as defined in Treas. Reg. Section 1.368-1T(e)(1)(ii)(A)) with
respect to, any shares of Company Common Stock prior to or in contemplation of
the Merger, or otherwise as part of a plan of which the Merger is a part.
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(b) Other than the Company Common Stock, the Company does not currently have
outstanding and at no point during the past twelve months had outstanding any
indebtedness, options, warrants, or other debt or equity securities that have
been or will be treated as stock for U.S. federal income tax purposes.
(c) Following the Merger, the Surviving Corporation will hold at least 90
percent of the fair market value of the net assets and at least 70 percent of
the fair market value of the gross assets of the Company immediately prior to
the Merger. For purposes of this representation, amounts paid by Company to
dissenters, amounts paid by the Company to shareholders who receive cash or
other property in the Merger, amounts used by the Company to pay reorganization
expenses, and all redemptions and distributions (except for regular, normal
dividends) made by the Company will be included as assets of Company immediately
prior to the Merger.
(d) The Company and the shareholders of the Company have paid and will pay
their respective expenses, if any, incurred in connection with the Merger. In
connection with the Merger, the Company has not paid or assumed and will not pay
or assume any expense or other liability, whether fixed or contingent, of any
Company stockholder. In connection with the Merger, neither Hain nor any of its
affiliates has paid or assumed or will pay or assume any expense of any Company
shareholder or, except as provided in Section 8.11 of this Agreement, any
expense of the Company. In connection with the Merger, no liabilities of Company
stockholders have been paid or assumed or will be paid or assumed by Hain or its
affiliates, nor will any shares of Company Common Stock acquired in the Merger
be subject to any liabilities.
(e) There is no indebtedness between Company and Hain.
(f) None of the Merger Consideration received in the Merger by any
shareholder-employees of the Company has been or will be separate consideration
for, or allocable to, past or future services or any employment agreement. None
of the compensation paid, or to be paid under any agreement or arrangement in
effect on the date hereof, by the Company to any shareholder-employee of the
Company will be separate consideration for, or allocable to, such
shareholder-employee's shares of Company Common Stock, and such compensation has
been or will be for services actually rendered in the ordinary course of his or
her employment and has been or will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services.
(g) The Company is not an investment company, as defined in Sections
368(a)(2)(F)(iii) and (iv) of the Code.
(h) The liabilities of the Company assumed by the Surviving Corporation and
any liabilities to which the assets of the Company are subject were incurred by
the Company in the ordinary course of its business.
(i) Neither the Company nor, to the Company's knowledge, any of its
affiliates has taken, agreed to take, or will take any action that would prevent
the Merger from constituting a transaction qualifying under Section 368(a) of
the Code or that would prevent an exchange of Company Common Stock for Hain
Common Stock pursuant to the Merger from qualifying as an exchange described in
Section 354 of the Code (except with respect to any cash received in lieu of a
fractional share). Neither the Company nor, to the Company's knowledge, any of
its affiliates or agents is aware of any agreement, plan or other circumstance
that would prevent the Merger from qualifying under Section 368(a) of the Code
or that would prevent an exchange of Company Common Stock for Hain Common Stock
pursuant to the Merger from qualifying as an exchange described in Section 354
of the Code (except with respect to any cash received in lieu of a fractional
share) and to the Company's knowledge, the Merger and each such exchange will so
qualify.
Notwithstanding the foregoing, if none of the Merger Consideration consists
of Stock Merger Consideration, then the representation set forth in this Section
5.28 shall be deemed to be included in this Agreement, and shall, in any event,
be deemed true and correct in all respects.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF HAIN
Hain represents and warrants to the Company that:
6.1 ORGANIZATION AND QUALIFICATION. Each of Hain and Hain's subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of Hain and Hain's subsidiaries is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except for failures
to be so qualified or in good standing which would not, individually or in the
aggregate, have a material adverse effect on the general affairs, management,
business, operations, condition (financial or otherwise) or prospects of Hain
and its subsidiaries taken as a whole (a "HAIN MATERIAL ADVERSE EFFECT").
Neither Hain nor any of Hain's subsidiaries is in violation of any of the
provisions of its certificate or articles of incorporation or organization or
by-laws. Hain has delivered to the Company accurate and complete copies of the
certificate or articles of incorporation or organization (or other applicable
charter document) and by-laws, as currently in effect, of each of Hain and its
subsidiaries.
6.2 CAPITAL STOCK OF SUBSIDIARIES. The only direct or indirect
subsidiaries of Hain are those listed in Section 6.2 of the Disclosure Schedule.
Hain is directly or indirectly the record (except for directors' qualifying
shares) and beneficial owner (including all qualifying shares owned by directors
of such subsidiaries as reflected in Section 6.2 of the Disclosure Schedule) of
all of the outstanding shares of capital stock of each of its subsidiaries.
6.3 CAPITALIZATION. The authorized capital stock of Hain consists of
40,000,000 shares of Hain Common Stock, par value $.01 per share, and 5,000,000
shares of Preferred Stock, par value $.01 per share. As of March 31, 1998,
11,386,899 shares of Common Stock are issued and outstanding and no shares of
preferred stock are issued and outstanding. All of such issued and outstanding
shares are, and any shares of Hain Common Stock to be issued in connection with
this Agreement, the Merger and the transactions contemplated hereby will be,
validly issued, fully paid and nonassessable and free of preemptive rights.
6.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Hain has full corporate power
and authority to execute and deliver this Agreement and to consummate the Merger
and other transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Merger and other transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of Hain
and no other corporate proceedings on the part of Hain are necessary to
authorize this Agreement or to consummate the Merger or other transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Hain and, assuming the due authorization, execution and delivery
hereof by the Company, constitutes a valid and binding agreement of Hain,
enforceable against Hain in accordance with its terms, except to the extent that
its enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
6.5 NO VIOLATIONS, ETC.
(a) Assuming that all filings, permits, authorizations, consents and
approvals or waivers thereof have been duly made or obtained as contemplated by
Section 6.5(b) hereof, neither the execution and delivery of this Agreement by
Hain nor the consummation of the Merger or other transactions contemplated
hereby nor compliance by Hain with any of the provisions hereof will (i)
violate, conflict with, or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or suspension of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Hain or any of
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Hain's subsidiaries under, any of the terms, conditions or provisions of (x)
their respective charters or by-laws, (y) except as set forth in Section 6.5 of
the Disclosure Schedule, any note, bond, mortgage, indenture or deed of trust,
or (z) any license, lease, agreement or other instrument or obligation, to which
Hain or any such subsidiary is a party or to which they or any of their
respective properties or assets may be subject, or (ii) subject to compliance
with the statutes and regulations referred to in the next paragraph, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to Hain or any of Hain's subsidiaries or any of their respective
properties or assets, except, in the case of clauses (i)(y), (i)(z) and (ii)
above, for such violations, conflicts, breaches, defaults, terminations,
suspensions, accelerations, rights of termination or acceleration or creations
of liens, security interests, charges or encumbrances which would not,
individually or in the aggregate, either have an Hain Material Adverse Effect or
materially impair the consummation of the Merger or other transactions
contemplated hereby.
(b) No filing or registration with, notification to and no permit,
authorization, consent or approval of any governmental entity is required by
Hain, Hain Subsidiary or any of Hain's subsidiaries in connection with the
execution and delivery of this Agreement or the consummation by Hain of the
Merger or other transactions contemplated hereby, except (i) in connection with
the applicable requirements of the HSR Act, (ii) the filing of the Delaware
Certificate of Merger and the Texas Certificate of Merger, (iii) filings with
The Nasdaq Stock Market, Inc., (iv) filings with the SEC and state securities
administrators, and (v) such other filings, registrations, notifications,
permits, authorizations, consents or approvals the failure of which to be
obtained, made or given would not, individually or in the aggregate, either have
an Hain Material Adverse Effect or materially impair the consummation of the
Merger or other transactions contemplated hereby.
(c) As of the date hereof, Hain and Hain's subsidiaries are not in violation
of or default under (x) their respective certificates or articles of
incorporation or organization or by-laws, (y) except as set forth in Section 6.5
of the Disclosure Schedule, any note, bond, mortgage, indenture or deed of
trust, or (z) any license, lease, agreement or other instrument or obligation to
which Hain or any such subsidiary is a party or to which they or any of their
respective properties or assets may be subject, except, in the case of clauses
(y) and (z) above, for such violations or defaults which would not, individually
or in the aggregate, either have an Hain Material Adverse Effect or materially
impair the consummation of the Merger or other transactions contemplated hereby.
6.6 COMMISSION FILINGS; FINANCIAL STATEMENTS. Except as set forth in
Section 6.6 of the Disclosure Schedule, Hain has filed all required forms,
reports and documents during the past three years (collectively, the "HAIN SEC
REPORTS") with the SEC, all of which complied when filed in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act. The audited consolidated financial statements and unaudited consolidated
interim financial statements of Hain and its subsidiaries included or
incorporated by reference in such Hain SEC Reports were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and present fairly, in all material respects, the financial position and results
of operations and cash flows of Hain and its subsidiaries on a consolidated
basis at the respective dates and for the respective periods indicated (and in
the case of all such financial statements that are interim financial statements,
contain all adjustments so to present fairly). Except to the extent that
information contained in any Hain SEC Report was revised or superseded by a
later filed Hain SEC Report, none of the Hain SEC Reports contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
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6.7 ABSENCE OF CHANGES OR EVENTS. Except as set forth in Hain's Form 10-K
for the fiscal year ended June 30, 1997 and Hain's Form 10-Q for each of the
three month periods ended September 30, 1997 and December 31, 1997, as filed
with the SEC, since December 31, 1997:
(a) there has been no material adverse change, or any development
involving a prospective material adverse change, in the business, operations
or financial condition of Hain and its subsidiaries taken as a whole;
(b) there has not been any direct or indirect redemption, purchase or
other acquisition of any shares of capital stock of Hain or any of its
subsidiaries, or any declaration, setting aside or payment of any dividend
or other distribution by Hain or any of its subsidiaries in respect of their
capital stock;
(c) except in the ordinary course of its business and consistent with
past practice neither Hain nor any of its subsidiaries has incurred any
indebtedness for borrowed money, or assumed, guaranteed, endorsed or
otherwise as an accommodation become responsible for the obligations of any
other individual, firm or corporation, or made any loans or advances to any
other individual, firm or corporation;
(d) there has not been any change in accounting methods, principles or
practices of Hain or its subsidiaries;
(e) except in the ordinary course of business and for amounts which are
not material, there has not been any revaluation by Hain or any of its
subsidiaries of any of their respective assets, including, without
limitation, writing down the value of inventory or writing off notes or
accounts receivables;
(f) there has not been any agreement by Hain or any of its subsidiaries
to (i) do any of the things described in the preceding clauses (a) through
(f) other than as expressly contemplated or provided for in this Agreement
or (ii) take, whether in writing or otherwise, any action which, if taken
prior to the date of this Agreement, would have made any representation or
warranty in this Article VI untrue or incorrect.
6.8 FORM S-4; PROSPECTUS/INFORMATION STATEMENT. None of the information
supplied or to be supplied by or on behalf of Hain and Hain Subsidiary for
inclusion or incorporation by reference in the Form S-4 will, at the time the
Form S-4 becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by or on behalf of Hain and Hain
Subsidiary for inclusion or incorporation by reference in the
Prospectus/Information Statement will, at the dates mailed to Company
shareholders pursuant to Section 8.1(b), contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Hain will promptly
inform the Company of the happening of any event prior to the Effective Time
which would render such information regarding Hain incorrect in any material
respect or require the amendment of the Prospectus/Information Statement.
6.9 BOARD RECOMMENDATION. The Board of Directors of Hain has, by a
majority vote at a meeting of such Board duly held on, or by written consent of
such Board dated April 8, 1998, approved and adopted this Agreement, the Merger
and the other transactions contemplated hereby (including, without limitation,
the issuance of Hain Common Stock as a result of the Merger), determined that
the Merger is fair to the holders of shares of Hain Common Stock. Hain does not
require stockholder approval of this Agreement, the Merger, the issuance of
shares of Hain Common Stock in connection therewith, and the related
transactions.
6.10 DISCLOSURE. All of the facts and circumstances not required to be
disclosed as exceptions under or to any of the foregoing representations and
warranties made by Hain by reason of any minimum
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disclosure requirement in any such representation and warranty would not, in the
aggregate, have an Hain Material Adverse Effect.
6.11 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Hain nor any of its
subsidiaries has any liabilities or obligations of any nature, whether absolute,
accrued, unmatured, contingent or otherwise, or any unsatisfied judgments or any
leases of personalty or realty or unusual or extraordinary commitments, except
the liabilities recorded on the Balance Sheet and the notes thereto, and except
for liabilities or obligations incurred in the ordinary course of business and
consistent with past practice since December 31, 1997 that would not
individually or in the aggregate have an Hain Material Adverse Effect.
6.12 FINDERS OR BROKERS. Except as set forth in Section 6.12 of the
Disclosure Schedule, none of Hain, the subsidiaries of Hain, the Board of
Directors of Hain or any member of the Board of Directors of Hain has employed
any investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee or any
commission in connection with the Merger.
6.13 OPINION OF FINANCIAL ADVISOR. On or prior to the Closing Date, Hain
will receive the opinion (the "Fairness Opinion") of Bear Stearns & Co. Inc., to
the effect that the Merger Consideration is fair from a financial point of view
to the stockholders of Hain.
6.14 EMPLOYEE BENEFIT PLANS; ERISA.
Neither Hain nor any subsidiary of Hain nor any Hain ERISA Affiliate has
incurred, or is reasonably likely to incur any material liability under Title IV
of ERISA. Neither Hain nor any subsidiary of Hain nor any Hain ERISA Affiliate
has incurred any material accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the Code. For
purposes of this Agreement, "HAIN ERISA AFFILIATE" shall mean any person (as
defined in Section 3(9) of ERISA) that is or has been a member of any group of
persons described in Section 414(b), (c), (m) or (o) of the Code including Hain
or any of its subsidiaries.
6.15 QUALIFICATION OF MERGER AS A TAX FREE REORGANIZATION.
(a) Hain has no plan or intention to reacquire or cause or permit any person
related (as defined in Treas. Reg. Section 1.368-1(e)(3)) to Hain to acquire any
of the Hain Common Stock issued to the holders of Company Common Stock pursuant
to the Merger.
(b) Prior to the transaction, Hain will be in control of Hain Subsidiary
within the meaning of section 368(c) of the Internal Revenue Code of 1986, as
amended (the "CODE").
(c) Following the Merger, Hain has no plan or intention to cause or permit
Hain Subsidiary to issue additional shares of its stock that would result in
Hain's losing control of Hain Subsidiary within the meaning of Section 368(c) of
the Code.
(d) There is no indebtedness between the Company and Hain.
(e) None of the Merger Consideration paid in the Merger by Hain will be
separate consideration for, or allocable to, past or future services or any
employment agreement.
(f) Neither Hain nor Hain Subsidiary is an investment company, as defined in
Sections 368(a)(2)(F)(iii) and (iv) of the Code.
(g) Hain has no plan or intention to liquidate Hain Subsidiary, to merge
Hain Subsidiary with or into another corporation, to sell or otherwise dispose
of the stock of Hain Subsidiary, or to cause Hain Subsidiary to sell or
otherwise dispose of any of the assets of the Company acquired in the Merger,
except for dispositions made in the ordinary course of business or transfers to
a corporation controlled (within the meaning of Section 368(c) of the Code) by
Hain Subsidiary or, in the case of a successive transfer, the transferor
corporation.
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(h) None of Hain, Hain Subsidiary or any affiliate of Hain has taken, agreed
to take, or will take any action that would prevent the Merger from constituting
a transaction qualifying under Section 368(a) of the Code or that would prevent
an exchange of Company Common Stock for Hain Common Stock pursuant to the Merger
from qualifying as an exchange described in Section 354 of the Code (except with
respect to any cash received in lieu of a fractional share). None of Hain, Hain
Subsidiary or any affiliate of Hain is aware of any agreement, plan or other
circumstance that would prevent the Merger from qualifying under Section 368(a)
of the Code or that would prevent an exchange of Company Common Stock for Hain
Common Stock pursuant to the Merger from qualifying as an exchange described in
Section 354 of the Code (except with respect to any cash received in lieu of a
fractional share) and to the knowledge of Hain, the Merger and each such
exchange will so qualify.
Notwithstanding the foregoing, if none of the Merger Consideration consists
of Stock Merger Consideration, then the representation set forth in this Section
6.15 shall not be deemed to be included in this Agreement, and shall, in any
event, be deemed true and correct in all respects.
ARTICLE VII
CONDUCT OF BUSINESS OF
THE COMPANY AND HAIN PENDING THE MERGER
7.1 CONDUCT OF BUSINESS OF THE COMPANY PENDING THE MERGER. Except as
contemplated by this Agreement or as expressly agreed to in writing by Hain,
during the period from the date of this Agreement to the Effective Time, each of
the Company and its subsidiaries will conduct their respective operations
according to its ordinary course of business consistent with past practice, and
will use all commercially reasonable efforts to maintain satisfactory
relationships with suppliers, distributors and customers having business
relationships with it and will take no action which would materially adversely
affect the ability of the parties to consummate the transactions contemplated by
this Agreement. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, prior to the Effective Time, the
Company will not nor will it permit any of its subsidiaries to, without the
prior written consent of Hain, which consent shall not be unreasonably withheld:
(a) amend its certificate or articles of incorporation or organization
or by-laws;
(b) except as set forth in Section 7.1 of the Disclosure Schedule,
authorize for issuance, issue, sell, deliver, grant any options for, or
otherwise agree or commit to issue, sell or deliver any shares of any class
of its capital stock or any securities convertible into shares of any class
of its capital stock, including the filing or processing of a registration
statement under the Securities Act in connection with an initial public
offering;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock or purchase, redeem or otherwise acquire any shares of its own
capital stock or of any of its subsidiaries, except as otherwise expressly
provided in this Agreement;
(d) (i) create, incur, assume, maintain or permit to exist any debt for
borrowed money other than under existing lines of credit in the ordinary
course of business consistent with past practice in an amount not to exceed
$1,000,000 in the aggregate; (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise)
for the obligations of any other person except for its wholly owned
subsidiaries in the ordinary course of business and consistent with past
practices and subclause (i) above; or (iii) make any loans, advances or
capital contributions to, or investments in, any other person;
(e) except as set forth in Section 7.1 of the Disclosure Schedule, (i)
increase in any manner the compensation of (x) any employee except in the
ordinary course of business consistent with past
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practice or (y) any of its directors or officers; (ii) pay or agree to pay
any pension, retirement allowance or other employee benefit not required, or
enter into or agree to enter into any agreement or arrangement with such
director or officer or employee, whether past or present, relating to any
such pension, retirement allowance or other employee benefit, except as
required under currently existing agreements, plans or arrangements; (iii)
except in accordance with Section 3.1(b) hereof, grant any severance or
termination pay to, or enter into any employment or severance agreement
with, (x) any employee except in the ordinary course of business consistent
with past practice or (y) any of its directors or officers; or (iv) except
as may be required to comply with applicable law, become obligated (other
than pursuant to any new or renewed collective bargaining agreement) under
any new pension plan, welfare plan, multiemployer plan, employee benefit
plan, benefit arrangement, or similar plan or arrangement, which was not in
existence on the date hereof, including any bonus, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other benefit plan, agreement or
arrangement, or employment or consulting agreement with or for the benefit
of any person, or amend any of such plans or any of such agreements in
existence on the date hereof;
(f) except as otherwise expressly contemplated by this Agreement, enter
into any other material agreements, commitments or contracts, except
agreements, commitments or contracts for the purchase, sale or lease of
goods or services in the ordinary course of business consistent with past
practice;
(g) authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into any agreement in principle or an
agreement with respect to, any plan of liquidation or dissolution, any
acquisition of a material amount of assets or securities, any sale,
transfer, lease, license, pledge, mortgage, or other disposition or
encumbrance of a material amount of assets or securities or any material
change in its capitalization;
(h) make any change in the accounting methods or accounting practices
followed by the Company;
(i) settle or compromise any material federal, state, local or foreign
Tax liability, make any new material Tax election, revoke or modify any
existing Tax election, or request or consent to a change in any method of
Tax accounting;
(j) unless the Merger Consideration consists solely of Cash Merger
Consideration, take, cause or permit to be taken any action, whether before
or after the Effective Date, that could reasonably be expected to prevent
the Merger from constituting a "reorganization" within the meaning of
Section 368(a) of the Code; or
(k) agree to do any of the foregoing.
7.2 CONDUCT OF BUSINESS OF HAIN PENDING THE MERGER. Except as contemplated
by this Agreement or as expressly agreed to in writing by the Company, during
the period from the date of this Agreement to the Effective Time, each of Hain
and its subsidiaries will use all commercially reasonable efforts to keep
substantially intact its business, properties and business relationships and
will take no action which would materially adversely affect the ability of the
parties to consummate the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Effective Time, Hain will not nor will
it permit any of its subsidiaries to, without the prior written consent of the
Company, which consent shall not be unreasonably withheld:
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(a) amend its certificate of incorporation or by-laws except as set
forth in this Agreement;
(b) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock or purchase, redeem or otherwise acquire any shares of its own
capital stock or of any of its subsidiaries, except as otherwise expressly
provided in this Agreement;
(c) authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into any agreement in principle or an
agreement with respect to, any plan of liquidation or dissolution, any
acquisition of an amount of assets or securities which would satisfy one or
more of the requirements of "significant subsidiary" for Hain, within the
meaning of Regulation S-X, on a pro forma basis before giving effect to the
Merger and the transactions contemplated thereby, any sale, transfer, lease,
license, pledge or mortgage or other disposition or encumbrance of a
material amount of assets or securities or any material change in its
capitalization; or
(d) agree to do any of the foregoing.
ARTICLE VIII
COVENANTS AND AGREEMENTS
8.1 PREPARATION OF THE FORM S-4.
(a) As soon as practicable following the date of this Agreement, Hain shall
prepare and file with the SEC the Form S-4, in which the Prospectus/Information
Statement shall be included as a prospectus. Hain shall use commercially
reasonable efforts to have the Form S-4 declared effective under the Securities
Act as promptly as practicable after such filing. Hain shall also take any
action required to be taken under any applicable state securities laws in
connection with the issuance of Hain Common Stock in the Merger. No filing of,
or amendment or supplement to, the Form S-4 will be made by Hain without the
consent of the Company, which shall not be unreasonably withheld. Hain shall
provide the Company and its counsel reasonable opportunity to review and comment
thereon. It is further acknowledged that the Company will need to obtain the
consent of Wasserstein Perella & Co. Inc. in connection with any description or
summary of its fairness opinion (or the work performed by such investment
banking firm in connection therewith) that is contained in any filing with the
SEC. Hain will advise the Company, promptly after it receives notice thereof, of
the time when the Form S-4 has become effective or any supplement or amendment
has been filed, the issuance of any stop order, the suspension of the
qualification of the Hain Common Stock issuable in connection with the Merger
for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Form S-4 or comments thereon and responses thereto or requests
by the SEC for additional information. If at any time prior to the Effective
Time any information relating to the Company or Hain, or any of their respective
affiliates, officers or directors, should be discovered by the Company or Hain
which should be set forth in an amendment or supplement to any of the Form S-4,
so that any of such documents would not include any misstatement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, the party which discovers such information shall promptly notify the
other parties hereto and an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the extent required by
law, disseminated to the shareholders of the Company. It is acknowledged that
the shares of Hain Common Stock, if any, to be issued in the Merger shall not be
subject to any restrictions on resale under the federal or state securities
laws; provided, in the case of shareholders who are parties to the Voting
Agreement, shares of Hain Common Stock received by such shareholders as Stock
Merger Consideration shall be initially deposited in trading accounts maintained
by Bear Stearns & Co. Inc.; PROVIDED, HOWEVER, nothing in this Agreement shall
be deemed to require that any shares of Hain Common Stock remain so deposited
for any period of time. Accordingly, at the election of Hain and its counsel,
after consultation with the Company and its counsel, Hain will either
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(i) include in the S-4 a plan of distribution that permits the recipients of
Hain Common Stock to sell any or all of their shares of Hain Common Stock
without any restrictions or (ii) file and have declared effective a registration
statement that permits the resale of such shares of Hain Common Stock without
any restrictions.
(b) The Company shall, through its Board of Directors, recommend that its
shareholders consent to this Agreement, the Merger and the other transactions
contemplated hereby. Upon receipt from Hain of a definitive copy of the
Prospectus/Information Statement in the form declared effective by the SEC, the
Company shall immediately cause a copy of the Prospectus/Information Statement
to be distributed to each of its shareholders, together with such other
information as may be required under the TBCA, including information relating to
Dissenters' Rights.
8.2 LETTERS AND CONSENTS OF THE COMPANY'S ACCOUNTANTS. The Company shall
use all commercially reasonable efforts to cause to be delivered to Hain all
consents required from its independent accountants necessary to effect the
registration of the Hain Common Stock and make any required filing with the SEC
in connection with the Merger and the transactions contemplated thereby, in each
case to the extent related to the financial statements listed on Schedule 8.2 of
the Disclosure Schedule. Notwithstanding any provision in this Agreement to the
contrary, the only financial information that the Company shall be required to
furnish to Hain in connection with the preparation of the S-4 or any other
securities law filing is the financial statements listed on Schedule 8.2.
8.3 LETTERS AND CONSENTS OF HAIN'S ACCOUNTANTS. Hain shall use all
commercially reasonable efforts to cause to be delivered to the Company all
consents required from its independent accountants necessary to effect the
registration of the Hain Common Stock and make any required filing with the SEC
in connection with the Merger and the transactions contemplated thereby.
8.4 ADDITIONAL AGREEMENTS; COOPERATION.
(a) Subject to the terms and conditions herein provided, each of the parties
hereto agrees to use commercially reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, and to cooperate with each other in
connection with the foregoing, including using commercially reasonable efforts
(i) to obtain all necessary waivers, consents and approvals from other parties
to loan agreements, material leases and other material contracts that are
specified in Section 8.4 to the Disclosure Schedule Statement, (ii) to obtain
all necessary consents, approvals and authorizations as are required to be
obtained under any federal, state or foreign law or regulations, (iii) to defend
all lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, (iv) to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby, (v)
to effect all necessary registrations and filings, including, but not limited
to, filings under the HSR Act and submissions of information requested by
governmental authorities, (vi) provide all necessary information for the Form
S-4 and (vii) to fulfill all conditions to this Agreement. Without limiting the
generality of the foregoing provisions, the parties acknowledge that the consent
of the lenders under the existing credit facility of the Company (the "CREDIT
AGREEMENT") with respect to the transactions contemplated by this Agreement is
required pursuant to the terms of the Credit Agreement. The Company will use its
commercially reasonable efforts to obtain such consents on or prior to the
Closing; PROVIDED, HOWEVER, that if such lenders are unwilling to give such
consents, then, on or prior to the Closing Date, Hain will refinance all amounts
outstanding under the Credit Agreement.
(b) The Company will supply Hain with copies of all correspondence, filings
or communications (or memoranda setting forth the substance thereof) between the
Company or its representatives, on the one hand, and the Federal Trade
Commission and the Antitrust Division of the United States Department of
Justice, on the other hand, with respect to this Agreement, the Merger and the
other transactions contemplated hereby. Each of the parties hereto agrees to
furnish to the other party hereto such necessary
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information and reasonable assistance as such other party may request in
connection with its preparation of necessary filings or submissions to any
regulatory or governmental agency or authority, including, without limitation,
any filing necessary under the provisions of the HSR Act or any other applicable
Federal or state statute.
(c) Hain and Hain Subsidiary will supply the Company with copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between Hain, Hain Subsidiary or their representatives, on
the one hand, and the Federal Trade Commission, the Antitrust Division of the
United States Department of Justice and the SEC, on the other hand, with respect
to this Agreement, the Merger and the other transactions contemplated hereby.
8.5 PUBLICITY. The Company and Hain agree to consult with each other in
issuing any press release and with respect to the general content of other
public statements with respect to the transactions contemplated hereby, and
shall not issue any such press release prior to such consultation; PROVIDED,
HOWEVER, that nothing herein will prohibit any party from issuing or causing
publication of any such press release or public announcement to the extent that
such party determines such action to be required by law or the rules of The
Nasdaq Stock Market, Inc., in which event the party making such determination
will, if practicable in the circumstances, use all commercially reasonable
efforts to allow the other party reasonable time to comment on such release or
announcement in advance of its issuance.
8.6 NO SOLICITATION. The Company agrees that, it shall not, and shall not
authorize or permit any of its subsidiaries or any of its or its subsidiaries'
directors, officers, employees, agents or representatives to, directly or
indirectly, solicit, initiate, facilitate or encourage (including by way of
furnishing or disclosing non-public information) any inquiries or the making of
any proposal with respect to any merger, consolidation or other business
combination involving the Company or its subsidiaries or acquisition of any kind
of all or substantially all of the assets or capital stock of the Company and
its subsidiaries taken as a whole (an "ACQUISITION TRANSACTION") or negotiate,
explore or otherwise communicate in any way with any third party (other than
Hain) with respect to any Acquisition Transaction or enter into any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by this Agreement;
PROVIDED that the Company may furnish information to, and negotiate or otherwise
engage in discussions with, any party who delivers a written proposal for an
Acquisition Transaction if and so long as the Board of Directors of the Company
determines in good faith by a majority vote, based upon the advice of its
outside legal counsel, that failing to take such action would constitute a
breach of the fiduciary duties of the Board, and in such case the Board of
Directors of the Company may withdraw its recommendation of this Agreement or
the Merger (provided that the foregoing shall in no way limit or otherwise
affect Hain's right to terminate this Agreement pursuant to Section 10.1). The
Company will immediately cease all existing activities, discussions and
negotiations with any parties conducted heretofore with respect to any of the
foregoing. To the extent such disclosure is not a breach of the fiduciary duties
of the Board of Directors as advised by outside legal counsel from and after the
execution of this Agreement, the Company shall promptly advise Hain in writing
of the receipt, directly or indirectly, of any inquiries, discussions,
negotiations, or proposals relating to an Acquisition Transaction (including the
material terms thereof).
8.7 ACCESS TO INFORMATION.
(a) From the date of this Agreement until the Effective Time, each of the
Company and Hain will, after reasonable notice, give the other party and its
authorized representatives (including counsel, environmental and other
consultants, accountants and auditors) reasonable access during normal business
hours to all facilities, personnel and operations and to all books and records
of it and its subsidiaries, will, after reasonable notice, permit the other
party to make such inspections as it may reasonably require and will cause its
officers and those of its subsidiaries to furnish the other party with such
financial and operating data and other information with respect to its business
and properties as such party may from time to time reasonably request.
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(b) All documents and information furnished pursuant to this Agreement shall
be subject to the terms and conditions set forth in the Confidentiality
Agreements dated May 14, 1997 and May 21, 1997 between Hain and the Company or a
subsidiary thereof, as amended (together, the "CONFIDENTIALITY AGREEMENT"). This
provision shall survive any termination of this Agreement.
8.8 NOTIFICATION OF CERTAIN MATTERS. Prior to the Effective Time, the
Company or Hain, as the case may be, shall promptly notify the other of (i) its
obtaining of actual knowledge as to the matters set forth in clauses (x) and (y)
below, or (ii) the occurrence, or failure to occur, of any event, which
occurrence or failure to occur would be likely to cause (x) any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time, or (y)
any material failure of the Company or Hain, as the case may be, or of any
officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; PROVIDED, HOWEVER, that no such notification shall affect the
representations or warranties of the parties or the conditions to the
obligations of the parties hereunder.
8.9 RESIGNATION OF DIRECTORS. At or prior to the Effective Time, the
Company shall deliver to Hain the resignations of such directors of the Company
and its subsidiaries as Hain shall specify, effective at the Effective Time.
8.10 INDEMNIFICATION AND INSURANCE.
(a) Hain and the Surviving Corporation agree that, except as may be limited
by applicable Laws, for seven (7) years from and after the Effective Time, the
indemnification obligations set forth in the Company's Articles of Incorporation
and the Company's By-Laws, or in any indemnification agreement to which the
Company is a party as of March 31, 1998, in each case as of the date of this
Agreement, shall survive the Merger and shall not be amended, repealed or
otherwise modified after the Effective Time in any manner that would adversely
affect the rights thereunder of the individuals who on or at any time prior to
the Effective Time were entitled to indemnification thereunder with respect to
matters occurring at or prior to the Effective Time.
(b) To the extent, if any, not provided by an existing right of
indemnification or other agreement or policy, from and after the Effective Time,
Hain shall, to the fullest extent such person could have been indemnified under
the DGCL or under the Certificate of Incorporation or the By-laws of Hain in
effect immediately prior to the Effective Time, indemnify, defend and hold
harmless the present and former directors, officers and management employees of
the parties hereto and their respective subsidiaries (each an "INDEMNIFIED
PARTY" and, collectively, the "INDEMNIFIED PARTIES") against (i) all losses,
expenses (including reasonable attorneys' fees and expenses), claims, damages,
costs, liabilities, judgments or (subject to the proviso of the next succeeding
sentence) amounts that are paid in settlement of or in connection with any
claim, action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director, officer or management employee of such party or any subsidiary
thereof, whether pertaining to any matter existing or occurring at or prior to
or after the Effective Time and whether asserted or claimed prior to, at or
after the Effective Time and (ii) all liabilities based in whole or in part on,
or arising in whole or in part out of, or pertaining to this Agreement or the
transactions contemplated hereby; PROVIDED, the indemnification contemplated in
this subclause (ii) shall not apply to any claim based on fraudulent
misrepresentation or willful breach. In the event of any such loss, expense,
claim, damage, cost, liability, judgment or settlement (whether or not arising
before the Effective Time), (x) Hain shall pay the reasonable fees and expenses
of counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to Hain, promptly after statements therefor are
received, and otherwise advance to the Indemnified Parties upon requested
reimbursement of documented expenses reasonably incurred, in either case to the
extent not prohibited by the laws of the State of Delaware, (y) Hain shall
cooperate in the defense of any such matter and (z) any determination required
to be made with respect to whether an Indemnified Party's conduct complies with
the standards under applicable law or as set forth in Hain's articles of
incorporation or bylaws shall be made by independent
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counsel mutually acceptable to Hain and the Indemnified Party; PROVIDED,
HOWEVER, that Hain shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld). The
Indemnified Parties as a group may retain only one law firm (other than local
counsel) with respect to each related matter except to the extent there could
reasonably be expected to be, in the sole opinion of counsel to an Indemnified
Party, under applicable standards of professional conduct, a conflict on any
significant issue between positions of any two or more Indemnified Parties, in
which case each Indemnified Party with a conflicting position on a significant
issue shall be entitled to separate counsel. In the event any Indemnified Party
is required to bring any action to enforce rights or to collect moneys due under
this Agreement is successful in such action, Hain shall reimburse such
Indemnified Party for all of its expenses in bringing and pursuing such action.
Each Indemnified Party shall be entitled to the advancement of expenses to the
full extent contemplated in this Section 8.10(b) in connection with any such
action.
8.11 FEES AND EXPENSES. Whether or not the Merger is consummated, the
Company and Hain shall bear their respective expenses incurred in connection
with the Merger, including, without limitation, the preparation, execution and
performance of this Agreement and the transactions contemplated hereby, and all
fees and expenses of investment bankers, finders, brokers, agents,
representatives, counsel and accountants, except that (a) Hain shall bear and
pay the costs and expenses incurred in connection with the filing, printing and
mailing of the Form S-4 (including SEC and state filing fees, all accounting
expenses incurred directly in connection therewith, and including the fees and
expenses of Vinson & Elkins L.L.P. incurred in connection therewith in an amount
not to exceed $50,000), (b) the Company or its shareholders existing prior to
the Effective Time shall bear and pay the fees, costs and expenses incurred in
connection with (i) the services of any finder or broker set forth under Section
5.21 hereof and (ii) any amounts owed to James Mortenson due in connection with
the Merger pursuant to any agreement between the Company and Mr. Mortenson
existing as of the date hereof and (c) Hain shall bear and pay the costs and
expenses incurred in connection with the filings of the premerger notification
and report forms under the HSR Act (including filing fees). If the Merger is
consummated, then for purposes of this Agreement, references to the Company or
its shareholders "bearing" fees, costs or expenses shall mean that, to the
extent that such expenses have been incurred by the Company prior to the
Effective Time, or incurred but not paid by any shareholder of the Company prior
to the Effective Time, the amount thereof (or a reasonable estimate thereof
mutually agreed to by the parties hereto in good faith) shall constitute a
deduction to the Cash Merger Consideration in accordance with Section 3.1(b)
hereof, and the shareholders shall have no further obligation to pay any such
fees, costs or expenses after the Effective Time.
8.12 NASDAQ LISTING. Hain shall use commercially reasonable efforts to
cause the Hain Common Stock to be issued in connection with the Merger to be
approved for listing on the National Market System of The Nasdaq Stock Market,
Inc., subject to official notice of issuance, as promptly as practicable after
the date hereof, and in any event prior to the Closing Date.
8.13 SHAREHOLDER LITIGATION. Each of the Company and Hain shall give the
other the reasonable opportunity to participate in the defense of any
shareholder litigation against or in the name of the Company or Hain, as
applicable, and/or their respective directors relating to the transactions
contemplated by this Agreement.
8.14 TAX TREATMENT. Unless the Merger Consideration consists solely of
Cash Merger Consideration, each of Hain and the Company shall treat the Merger
as a tax free reorganization under the provisions of Section 368 of the Code on
its Tax Returns.
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ARTICLE IX
CONDITIONS TO CLOSING
9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) SHAREHOLDER APPROVALS. Approval of the Merger and the transactions
contemplated thereby shall have been obtained by the requisite approval of
the Company's shareholders.
(b) HSR ACT. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No material judgment, order, decree,
statute, law, ordinance, rule or regulation entered, enacted, promulgated,
enforced or issued by any court or other governmental entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"RESTRAINTS") shall be in effect preventing the consummation of the Merger.
(d) FORM S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order and no stop order or similar restraining order shall be
threatened or entered by the SEC or any state securities administration
preventing the Merger.
(e) NASDAQ LISTING. The shares of Hain Common Stock issuable to the
Company's shareholders as contemplated by this Agreement shall have been
approved for listing on National Market System of The Nasdaq Stock Market,
Inc., subject to official notice of issuance.
(f) CONSENTS AND APPROVALS. All necessary consents and approvals of any
United States or any other governmental authority or any other third party
required for the consummation of the transactions contemplated by this
Agreement shall have been obtained; except for such consents and approvals
the failure to obtain which individually or in the aggregate would not have
a material adverse effect on the Surviving Corporation.
(g) GARDEN OF EATIN' TRANSACTION. All of the conditions precedent to the
obligations of the parties pursuant to that certain Agreement and Plan of
Merger dated of even date herewith by and between Hain and Garden of Eatin',
Inc. (the "GOE AGREEMENT") shall have been satisfied or waived by the
parties thereto, and Hain shall have delivered to the Company a certificate
of an executive officer thereof that the parties are prepared to, and intend
to, consummate the transactions contemplated thereby simultaneously with the
consummation of the transactions contemplated hereby at the Effective Time.
9.2 CONDITIONS TO OBLIGATIONS OF HAIN. The obligation of Hain to effect
the Merger is further subject to satisfaction or waiver of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations, warranties and
covenants of the Company set forth herein, to the extent qualified with
respect to materiality, shall be true and correct in all respects, and to
the extent not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and at and as of the
Effective Time as if made at and as of such time (except to the extent
expressly made as of earlier date, in which case as of such date). The
Company shall have delivered to Hain an officer's certificate, in form and
substance satisfactory to Hain and its counsel, to the effect of the matters
stated in this Section 9.2(a) and Section 9.2(b).
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date.
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(c) CONSENT OF ACCOUNTANTS. Hain shall have received all consents
required from the independent accountants in connection with the filing of
the Form S-4 of the Company necessary to effect the registration of the Hain
Common Stock.
(d) REAL ESTATE HOLDING CORPORATION. The Company shall have (i)
delivered an affidavit stating, under penalty of perjury, that (A) the
Company is not and has not been at any time during the five-year period
prior to the Effective Time a "United States real property holding
corporation," as defined for purposes of section 897(c)(2) of the Code and
(B) as of the Effective Time, interests in the Company are not United States
real property holding company interests by reasons of Section 897(c)(1)(B)
of the Code and (ii) complied with the requirements of Treas. Reg.
Section1.897-2(h) and provided evidence (reasonably satisfactory to Hain) of
such compliance.
(e) TAX OPINION. Hain shall have received an opinion of Cahill Gordon &
Reindel, counsel to Hain, dated on or about the Closing Date, based upon
such representations and assumptions as counsel may reasonably deem
relevant, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization qualifying under the provisions of Sections
368(a)(1)(a) and 368(a)(2)(D) of the Code; that each of Hain, Hain
Subsidiary and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code; that gain, if any, realized by a
shareholder of the Company on the exchange on Company Common Stock for the
Merger Consideration will be recognized only to the extent of the Cash
Merger Consideration received by such shareholder; that no loss will be
recognized by a shareholder of the Company on the exchange of Company Common
Stock for the Merger Consideration pursuant to the Merger (except with
respect to any cash received in lieu of a fractional share). If the Merger
Consideration consists solely of Cash Merger Consideration, then the
condition set forth in this Section 9.2(e) shall be deemed to be fully
satisfied for all purposes of this Agreement.
(f) OPINION OF COMPANY COUNSEL. Hain shall have received an opinion from
Vinson & Elkins L.L.P., counsel to the Company, substantially to the effect
set forth in EXHIBIT A hereto.
(g) VOTING AGREEMENT. The voting agreement and irrevocable proxy dated
the date hereof (the "VOTING AGREEMENT") pursuant to which shareholders
owning at least two thirds of the outstanding Company Common Stock have
agreed to vote in favor of the Merger and the transactions related thereto
shall be in full force and effect as of the Closing Date.
(h) DISSENTERS' RIGHTS. The number of shares of Company Common Stock for
which shareholders thereof have asserted Dissenters' Rights shall not exceed
15% of the outstanding Company Common Stock.
(i) POST-MERGER OWNERSHIP. Immediately prior to the Effective Time, the
Company shall provide evidence reasonably satisfactory to Hain that, upon
consummation of the Merger and the issuance of the Stock Merger
Consideration, no shareholder of Company Common Stock immediately prior to
the Effective Time shall hold or have the right to vote immediately after
the issuance of the Stock Merger Consideration greater than 4% (four
percent) of the Hain Common Stock then outstanding (assuming a Closing Date
Market Price of $20.00 per share and that 50% of the Merger Consideration is
paid in Stock Merger Consideration).
(j) CANCELLATION OF OPTIONS TO PURCHASE COMPANY COMMON STOCK. At the
Effective Time, the Company shall have taken all such action necessary to
cause all outstanding options to purchase shares of Company Common Stock
(the "OPTIONS") to be canceled as of the Effective Time (irrespective of
whether such options are then exercisable pursuant to the provisions
thereof) in consideration for the right to receive from Hain at the
Effective Time for each optionee (i) an amount of cash per share equal to
the excess, if any, of (x) the Cash Merger Consideration that such optionee
would have received if such optionee had exercised his Option in full
immediately prior to the Effective Time (taking into account the provisions
of the last sentence of this paragraph (j)) over (y)
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the aggregate exercise price under such Option for such shares and (ii) the
amount of Stock Merger Consideration (including any cash in lieu of
fractional shares) that such optionee would have received if such optionee
had exercised his Option in full immediately prior to the Effective Time
(taking into account the provisions of the last sentence of this paragraph
(j)); PROVIDED, HOWEVER, that if the amount in clause (i)(y) is greater than
the amount in clause (i)(x), then the value of shares of Hain Common Stock
(valued at the Closing Date Market Price) delivered pursuant to clause (ii)
shall be reduced by the amount of such excess. The aggregate amount of cash
and shares of Hain Common Stock (valued at the Closing Date Market Price)
that is paid pursuant to this paragraph shall be deemed a transaction
expense for purposes of Section 8.11 hereof.
9.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Hain set forth herein, to the extent qualified with respect to
materiality, shall be true and correct in all respects, and to the extent
not so qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and at and as of the Effective Time as
if made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date).
(b) PERFORMANCE OF OBLIGATIONS OF HAIN AND HAIN SUBSIDIARY. Hain and
Hain Subsidiary shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or
prior to the Closing Date.
(c) TAX OPINION. The Company shall have received an opinion of Vinson &
Elkins L.L.P., counsel to the Company, dated on or about the Closing Date,
based upon such representations and assumptions as counsel may reasonably
deem relevant, to the effect that the Merger will be treated for federal
income tax purposes as a reorganization qualifying under the provisions of
Sections 368(a)(1)(a) and 368(a)(2)(D) of the Code; that each of Hain, Hain
Subsidiary and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code; that gain, if any, realized by a
shareholder of the company on the exchange on Company Common Stock for the
Merger Consideration will be recognized only to the extent of the Cash
Merger Consideration received by such shareholder; that no loss will be
recognized by a shareholder of the Company on the exchange of Company Common
Stock for the Merger Consideration pursuant to the Merger (except with
respect to any cash received in lieu of a fractional share). If the Merger
Consideration consists solely of Cash Merger Consideration, then the
condition set forth in this Section 9.3(d) shall be deemed to be fully
satisfied for all purposes of this Agreement.
(d) OPINION OF HAIN COUNSEL. The Company shall have received an opinion
from Cahill Gordon & Reindel, counsel to Hain, substantially to the effect
set forth as EXHIBIT B.
(e) MERGER CONSIDERATION. In the event any of the Merger Consideration
consists of Stock Merger Consideration, then at least 50% of the Merger
Consideration shall be comprised of Stock Merger Consideration and Cash
Merger Consideration, when aggregated with the cash merger consideration
paid in connection with the GOE Agreement, shall be greater than or equal to
$20.0 million.
ARTICLE X
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after and approval of this Agreement by
the Company's shareholders:
(a) by mutual written consent of the Company and Hain;
(b) by either the Company or Hain:
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(i) if the Merger shall not have been consummated by August 30, 1998;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to
this Section 10.1(b)(i) shall not be available to any party whose failure
to perform any of its obligations under this Agreement results in the
failure of the Merger to be consummated by such time; or
(ii) if any Restraint having any of the effects set forth in Section
9.1(c) shall be in effect and shall have become final and nonappealable;
(c) by Hain, if the Board of Directors of the Company shall withdraw,
modify or change its recommendation of this Agreement or the Merger in a
manner adverse to Hain;
(d) by Hain, if the Company shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement (which breach is not cured
within 15 business days after receipt by the Company of a written notice of
such breach from Hain specifying the breach and requesting that it be cured)
or if the Voting Agreement ceases to be in full force and effect;
(e) by the Company, if Hain shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement (which breach is not cured
within 15 business days after receipt by the Company of a written notice of
such breach from Hain specifying the breach and requesting that it be
cured);
(f) by the Company, if, prior to the Effective Time, the Board of
Directors of the Company approves an agreement to effect an Acquisition
Transaction if the Board of Directors has determined in good faith, upon
advice from its outside counsel, that failure to approve such agreement and
terminate this Agreement would constitute a breach of the fiduciary duties
of the Company Board (and so advised Hain) and the Board of Directors
reasonably believes that such Acquisition Transaction is more favorable to
the Company's shareholders than the transaction contemplated by this
Agreement; or
(g) by the Company, if the Form S-4 is not declared effective by July
15, 1998.
10.2 EFFECT OF TERMINATION.
(a) The termination of this Agreement shall become effective upon delivery
to the other party of written notice thereof. In the event of the termination of
this Agreement pursuant to the foregoing provisions of this Article X, this
Agreement shall become void and have no effect, with no liability on the part of
any party (except as provided in paragraph (b) below) or its shareholders or
stockholders or directors or officers in respect thereof except for agreements
which survive the termination of this Agreement and except for liability that
Hain or the Company might have arising from a breach of this Agreement.
(b) In the event of a termination of this Agreement by the Company pursuant
to Section 10.1(f), then the Company shall within two business days of such
termination pay Hain by wire transfer of immediately available funds to an
account specified by Hain (i) up to $600,000 to reimburse Hain, aggregated
together with amounts provided therefor under Section 10.2(b)(i) of the GOE
Agreement, for its documented fees and expenses (including the fees and expenses
of counsel, accountants, consultants and advisors) incurred in connection with
this Agreement and the transactions contemplated hereby and (ii) a fee of
$770,000 as liquidated damages.
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ARTICLE XI
MISCELLANEOUS
11.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 11.1 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
(b) Each of the parties is a sophisticated legal entity that was advised by
knowledgeable counsel and, to the extent it deemed necessary, other advisors in
connection with this Agreement. Accordingly, each of the parties hereby
acknowledges that (i) no party has relied or will rely upon any document or
written or oral information previously furnished to or discovered by it or its
representatives, other than this Agreement, the GOE Agreement and the Voting
Agreement or in the Disclosure Schedules or any certificates delivered at the
Effective Time pursuant hereto or thereto and (ii) there are no representations
or warranties by or on behalf of any party hereto or any of its respective
affiliates or representatives other than those expressly set forth in this
Agreement, the GOE Agreement and the Voting Agreement or in the Disclosure
Schedules or in any certificates delivered at the Effective Time pursuant to
hereto or thereto.
(c) The disclosures made on any section of the Disclosure Schedule with
respect to any representation or warranty shall be deemed to be made with
respect to any other representation or warranty requiring the same or similar
disclosure to the extent that the relevance of such disclosure to other
representations and warranties is evident from the face of the applicable
section of the Disclosure Schedule. All references in this Agreement to the
"knowledge of the Company" (or any similar phrase) will be deemed to be
references solely to the actual knowledge of the executive officers of the
Company. The inclusion of any matter on any disclosure schedule will not be
deemed an admission by any party that such listed matter is material or that
such listed matter has or would have a Company Material Adverse Effect or Hain
Material Adverse Effect, as the case may be.
11.2 CLOSING AND WAIVER.
(a) Unless this Agreement shall have been terminated in accordance with the
provisions of Section 10.1 hereof, a closing (the "CLOSING" and the date and
time thereof being the "CLOSING DATE") will be held as soon as practicable after
the conditions set forth in Sections 9.1, 9.2 and 9.3 shall have been satisfied
or waived. The Closing will be held at the offices of Cahill Gordon & Reindel,
80 Pine Street, New York, New York or at such other places as the parties may
agree. Simultaneously therewith, each of the Delaware Certificate of Merger and
the Texas Certificate of Merger will be filed.
(b) At any time prior to the Effective Date, any party hereto may (i) extend
the time for the performance of any of the obligations or other acts of any
other party hereto, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing duly authorized by and
signed on behalf of such party.
11.3 NOTICES.
(a) Any notice or communication to any party hereto shall be duly given if
in writing and delivered in person or mailed by first class mail (registered or
certified, return receipt requested), facsimile or overnight air courier
guaranteeing next day delivery, to such other party's address.
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If to Hain or Hain Subsidiary:
The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
Facsimile No.: (516) 237-6240
Attention: President
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Roger Meltzer, Esq.
If to the Company:
Arrowhead Mills, Inc.
110 South Lawton
Hereford, Texas 79045
Facsimile No.: (806) 364-1068
Attention: Chief Operating Officer
with a copy to:
Vinson & Elkins L.L.P
2300 First City Tower
1001 Fannin Street
Houston, TX 77002-6760
Facsimile No.: (713) 758-2346
Attention: J. Mark Metts, Esq.
(b) All notices and communications will be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five business days after
being deposited in the mail, if mailed; when sent, if sent by facsimile; and the
next business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
11.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.5 INTERPRETATION. The headings of articles and sections herein are for
convenience of reference, do not constitute a part of this Agreement, and shall
not be deemed to limit or affect any of the provisions hereof. As used in this
Agreement, "person" means any individual, corporation, limited or general
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof; "subsidiary" of any person means (i) a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
person or by one or more other subsidiaries of such person or by such person and
one or more subsidiaries thereof or (ii) any other person (other than a
corporation) in which such person, or one or more other subsidiaries of such
person or such person and one or more other subsidiaries thereof, directly or
indirectly, have at least a majority ownership and voting power relating to the
policies, management and affairs thereof; and "voting stock" of any person means
capital stock of such person which ordinarily has voting power for the election
of directors (or persons performing similar functions) of such person, whether
at all times or only so long as no senior class of securities has such voting
power by reason of any contingency.
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11.6 AMENDMENT. This Agreement may be amended by the parties at any time
before or after any required approval of matters presented in connection with
the Merger by the shareholders of the Company; provided, however, that after any
such approval, there shall not be made any amendment that by law requires
further approval by such shareholders without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
11.7 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall confer
any rights upon any person or entity which is not a party or permitted assignee
of a party to this Agreement, except for rights of Indemnified Parties as set
forth in Section 8.10 (Directors' and Officers' Indemnification.
11.8 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws.
11.9 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
11.10 NO RECOURSE AGAINST OTHERS. No director, officer or employee, as
such, of Hain, Hain Subsidiary or the Company or any of their respective
subsidiaries shall have any liability for any obligations of Hain, Hain
Subsidiary or the Company, respectively, under this Agreement for any claim
based on, in respect of or by reasons of such obligations or their creation.
11.11 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement to
be executed by their duly authorized officers all as of the day and year first
above written.
THE HAIN FOOD GROUP, INC.
By: /s/ IRWIN D. SIMON
-----------------------------------------
Name: Irwin D. Simon
Title: President and Chief Executive
Officer
ARROWHEAD MILLS, INC.
By: /s/ CHARLES ESSERMAN
-----------------------------------------
Name: Charles Esserman
Title:
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